Halifax has revealed that house prices in October were 7.5% higher than in the same month a year earlier.
This is the strongest growth since June 2016.
On a monthly basis, house prices in October were 0.3% higher than in September and in the latest quarter (August to October) house prices were 4.0% higher than in the preceding three months (May to July).
Halifax said the average house price in October was £250,457.
Russell Galley, managing director of Halifax, said: “The average UK house price now tops a quarter of a million pounds (£250,457) for the first time in history, as annual house price inflation rose to 7.5% in October, its highest rate since mid-2016. Underlying the pace of recent price growth in the market is the 5.3% gain over the past four months, the strongest since 2006. However, month-on-month price growth slowed considerably, down to just 0.3% compared to 1.5% in September.
“Overall we saw a broad continuation of recent trends with the market still predominantly being driven by home-mover demand for larger houses. Since March flat prices are up by 2.0% compared to a 6.0% increase for a typical detached property. In cash terms that equates to a £2,883 increase for flats compared to a £27,371 rise for detached houses.
“This level of price inflation is underpinned by unusually high levels of demand, with latest industry figures showing home-buyer mortgage approvals at their highest level since 2007, as transaction levels continue to be supercharged by pent-up demand as a result of the spring/summer lockdown, as well as the Chancellor’s waiver on stamp duty for properties up to £500,000.
“While government support measures have undoubtedly helped to delay the expected downturn in the housing market, they will not continue indefinitely and, as we move through autumn and into winter, the macroeconomic landscape in the UK remains highly uncertain. Though the renewed lockdown is set to be less restrictive than earlier this year, it bears out that the country’s struggle with Covid-19 is far from over. With a number of clear headwinds facing the housing market, we expect to see greater downward pressure on house prices as we move into 2021.”
David Westgate, group chief executive at Andrews Property Group, added: “On the surface this is one of the greatest bull runs in the UK property market, but sadly a giant bear is looming on the horizon. You can feel its presence in the negligible monthly growth rate of just 0.3% compared to September.
“After a surge led by post-lockdown demand, the stamp duty holiday and a desire to relocate for extra lockdown space, the market is now in cool down mode.
“That the furlough scheme has been extended until the end of March will provide a degree of support to prices but you only have to read the papers to see the rise in the number of unemployed and businesses folding. Much depends on whether the headwinds turn into a hurricane.
“Lenders have grown increasingly conservative in recent months and anyone with a small deposit now has a real struggle on their hands. At lower loan to values, where lenders feel relaxed, it’s business as usual and we’re not expecting the market to grind to a halt during the winter.
“Landlords and people who have a solid level of equity in their homes are proving more active than ever in what is increasingly a buyers’ market.”