The average price of a house in the UK is at a record high but demand could slow as a result of policies in Rachel Reeves' budget, Britain's biggest mortgage lender has said.
According to Halifax's monthly house price index, house prices reached a record high of £293,999 in October, surpassing the June 2022 record of £293,507.
The 0.2% increase in October was the fourth consecutive month of home price increases, bringing the annual growth rate to 3.9% from 4.6% in September.
The numbers suggest homebuyers have shaken off concerns about what will be included in Reeves' debut budget, submitted at the end of October. But Mr Halifax said the measures included in the prime minister's speech could impact future demand.
Amanda Bryden, head of mortgage lending in Halifax, said it was surprising to see home prices surpass June 2022 levels, especially with the headwinds of rising interest rates, but prices have fallen significantly since then. He said that what he did not do was more noteworthy. point.
In June 2022, the country was emerging from the pandemic, there was pent-up demand for home purchases and what Halifax called a “war for space” for buyers, she said.
Halifax has also seen recent improvement in market activity despite continued affordability challenges around high mortgage prices, with mortgage levels agreed at their highest level in two years. He said that
But Mr Bryden said the pace of decline in mortgage rates would be hampered by the policies set out by the Chancellor in last week's Budget.
“Following the Budget, markets expect the Bank of England to cut interest rates more slowly than previously expected, which could keep mortgage costs high for an extended period of time,” he said. Ta. New policies, such as an increase in stamp duty for second home buyers or a return to the previous threshold for first home buyers, may also impact demand. ”
The lender predicted house prices would continue to rise, but that growth would “remain at a moderate pace for the remainder of this year and into next year.”
As part of the budget, Reeves will increase stamp duty on the purchase of rental homes and vacation homes from 3% to 5% and reduce the stamp duty on the purchase price to zero, the sale amount before consumers start paying. Temporary price increases have been abolished. tax.
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The zero rate for first-time buyers will be reduced from £450,000 to £300,000, and for additional home buyers it will be reduced from £250,000 to £125,000.
Northern Ireland continued to be the region with the highest price increases in the UK, with average property prices of £204,242, up 10.2% on the previous year.
The North West of England has seen the biggest rise in prices, up 5.9% over last year, with property prices now averaging £235,587.
The average property price in London is now £543,308, up 3.5% on last year.
