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Property prices soared by more than 7% in the past year as Britain’s housing bonanza shows no signs of stopping soon.
The Halifax reports the average home sale was £249,870 in September 2020 as prices jumped by 7.3% - the most significant rise since 2016. Meanwhile, the latest official data from the Office for National Statistics (ONS) shows the UK annual price rise of 2.3% and an average property price of £237,963.
The data inconsistencies are because both sets of figures are for different periods – the Halifax data is for the year ending September, while the ONS index is for the year to July.
The Bank of England revealed 84,715 mortgage applications were received by lenders in August – a 28% rise on the previous month and 29% higher than 12 months earlier – the highest level since October 2007 before the financial crisis hit the global economy.
Russell Galley, the bank’s managing director, said: “The average UK house price is now approaching £250,000 after September saw a third consecutive month of substantial gains. The annual rate of change will naturally draw attention, with the increase of 7.3% the strongest since mid-2016. Context is important with the annual comparison, however, as September 2019 saw political uncertainty weigh on the market.
“Few would dispute that the performance of the housing market has been extremely strong since lockdown restrictions began to ease in May. Across the last three months, we have received more mortgage applications from both first time buyers and home movers than any time since 2008.
“There has been a fundamental shift in demand from buyers brought about by the structural effects of increased home working and a desire for more space, while the stamp duty holiday is incentivising vendors and buyers to close deals at pace before the break ends next March.”
Galley also warned that the house market boom is likely temporary, and prices will fall as the economy is gripped by unemployment as the government furlough aid drops off in the coming months.
“Research indicates that, of the people that had been considering a move before the pandemic, 19% have put their plans on hold, with over a quarter (27%) of these citing concerns about the property market,” said Nationwide’s chief economist Robert Gardner.
“Younger people were much more likely to have put off plans than older people, which may reflect concerns about employment prospects.
“Indeed, most forecasters expect labour market conditions to weaken significantly in the quarters ahead as tighter restrictions dampen economic activity and the furlough scheme winds down. While the recently announced jobs support scheme will provide some assistance, it is not as comprehensive as the furlough scheme it replaces.
“But the pandemic may be spurring an even greater number of potential home movers into action.”
Read the full Nationwide report
Average house prices in the UK increased by 2.3% in the year to July 2020, down from 2.9% in June 2020. At the country level, the most significant annual house price growth was recorded in Wales, increasing by 3.6% from July 2020. England saw house prices rise by 2.5% from July 2020, and Scotland saw house prices increase by 0.4% from July 2020.
Source: ONS
| Property type | July 2020 | July 2019 | Difference |
| Detached | £361,986 | £352,091 | 2.80% |
| Semi-detached | £227,832 | £220,307 | 3.40% |
| Terraced | £193,619 | £188,616 | 2.70% |
| Flat or maisonette | £205,702 | £206,741 | -0.50% |
| All | £237,963 | £232,618 | 2.30% |
Source: ONS
Although property prices are increasing, the number of homes changing hands has dropped significantly this year. The ONS data shows levels peaked in May 2017, when 87,737 homes were sold. In May 2020, this had fallen to 32,248 – a 63% drop.
The figures for average house prices and movements in property values can be confusing if you don’t know how to read the data. Here are some of the most asked questions about house price indices.
The reports use different data to draw conclusions and take the data from different periods.
The Nationwide and Halifax indices are based on their customer data, which are much smaller samples than the national data analysed by the ONS. Acadata’s methodology includes analysis that no other index uses.
Each organisation collects data over different periods – Nationwide and Halifax are for the year to September, while the ONS is to the end of July.
There’s no such thing as an average home; the figure is simply math calculated from the total value of all transactions in the sample divided by the number of homes changing hands.
They are all flawed because of the restricted data they are based on, but the one with the broadest sample comes from the ONS. However, the ONS data is usually the last to market and out of date by three months on publication.