UK house prices record biggest monthly growth in 14 years

'For Sale' sign outside of a terraced house in the UK

The UK property market is not showing any signs of relenting. According to the Halifax House Price Index, house prices in September registered the strongest monthly rise since 2007. Here’s exactly how much house prices have risen and what it means for those looking to buy a home.

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How much did house prices rise in September?

According to Halifax, house prices rose by 1.7% in September, translating to a £4,400 increase in the average cost of a home. This monthly rise is the strongest since February 2007 and pushes the annual house price growth rate to 7.4%.

This also reverses a three-month downward trend in annual growth which began in June after peaking at an annual rate of 9.6% in May. The average price of a house in the UK is now at a record £267,500.

Why are house prices still rising?

While the rush of buyers trying to complete deals before the end of the Stamp Duty holiday may have influenced September’s numbers, they are not entirely responsible for the record monthly rise.

According to Russell Galley, managing director at Halifax, most mortgages agreed in September would not have been completed before the Stamp Duty holiday expired. As a result, other factors could have contributed to the rise in house prices.

One factor that had a major impact is the ‘race for space’, as buyers searched for bigger properties and made lifestyle changes after the pandemic.

Are house prices likely to fall soon?

According to Galley, demand could soften in the coming months as rising costs of living strain buyers’ finances. In fact, some recent figures show that buying activity has already reduced.

On the flip side, Galley says that “low borrowing costs and improving labour market prospects for those already in employment are likely to continue to provide support”.

He reckons that the biggest factor that will determine the trajectory of house prices going forward is housing supply.

Estate agents are still reporting low numbers of properties on their books. If supply remains low, then prices are likely to continue growing, albeit at a slower pace than they are now.

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Is now a good time to buy?

As house prices continue to rise, the Halifax figures make reading for those who are planning to buy. People are increasingly likely to be priced out of the market, forcing them to put their plans on hold.

Those who are successful in buying a new home will almost certainly have to pay a premium to do so.

If you’re in a position to buy, you may be wondering whether it’s best to buy now or wait for the market to cool down.

There is no easy answer to this. While price is an important factor to consider, a lot will also depend on your personal needs and your current financial situation.

Most experts will tell you there is no such thing as a perfect time to buy a home. So, if you find one that you want, that you can afford and that you intend to live on for a long time, it may be worth buying now rather than relying on an uncertain future.

An advantage of buying now is that mortgage rates are at historic lows. With a decent deposit, you may be able to obtain a good mortgage deal with low monthly payments.

The less you pay on your mortgage each month, the more you will have to cover other expenses such as home insurance or any repairs or improvements needed when you move in.

Can you get help?

Raising a sufficient deposit in the current market may prove difficult for some buyers.

Fortunately, there are several government programmes that can assist you.

For example, there are two government schemes, the mortgage guarantee scheme and the Help to Buy: Equity Loan scheme. Both of these will help you get a mortgage with just a 5% deposit. It’s worth looking them up to see if either of them can assist you in realising your dream of owning a home.

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