House prices: When will house prices fall? Latest figures comes with WARNING

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House prices have risen by 7.3 percent compared to September last year, Halifax has announced. The figure makes the average price of a home in the UK £249,870, whilst one year ago, the average house price was £232,806. But the latest rise in house prices comes with a warning.

When will house prices fall?

Yopa’s Chief Analyst Mike Scott on this morning’s Halifax HPI: “Halifax’s new House Price Index for September shows a sudden acceleration in the rate of house price growth, with prices 7.3 percent higher than in September last year.

“This is the fastest rate of annual growth in more than four years, and provides further evidence that the housing market has been very active since the end of the full national lockdown.

“Halifax also reports having received more mortgage applications over the past three months than in any three-month period since 2008.”

He added: “However, the market is likely to slow down again next year, once the pent-up demand has been satisfied and the stamp duty holiday ends, against a backdrop of rising unemployment as the economy continues to adjust to the effects and after-effects of the pandemic.

“We do not expect significant price falls next year, but neither do we expect that prices will continue to rise at year-on-year rates in excess of seven percent.”

Russell Galley, Managing Director at Halifax, also commented on the latest data, saying the housing market has been “extremely strong” since lockdown restrictions began easing in May.

He said: “Across the last three months, we have received more mortgage applications from both first time buyers and homemovers than anytime 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.”

But Mr Galley warned it is “highly unlikely” the housing market will “continue to remain immune to the economic impact of the pandemic”.

He said: “The release of pent up demand and indeed the stamp duty holiday can only be temporary fillips and their impact will inevitably start to wane.

“And as employment support measures are gradually scaled back beyond the end of October, the spectre of increased unemployment over the winter will come into sharper relief.

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“Therefore while it may come later than initially anticipated, we continue to believe that significant downward pressure on house prices should be expected at some point in the months ahead as the realities of an economic recession are felt ever more keenly.”

Recent data from the Bank of England showed mortgage approvals had risen to the highest level in almost 13 years in August.

House prices grew 1.6 per cent month on month in September.

Halifax noted in its latest research the figure was looking particularly good due to worries over Brexit last year.

Another factor contributing to the rise in house prices is the Stamp Duty holiday.

In July, Chancellor Rishi Sunak raised the treshold of the duty to £500,000.

The Stamp Duty holiday will be in place until the end of March 2021.

Lucy Pendleton of estate agents James Pendleton said: “The often frothy Halifax index has lived up to its reputation and is pushing the bounds of credibility here.

“However, it underlines just how much the housing market has become the economy’s iron lung of late, while its other vital signs flash amber at best.”

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