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House Prices in the UK Reach Record Highs Despite the Pandemic

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UK house prices reached new record highs in August. According to one of the UK’s largest mortgage lenders, the average price of a property rose above £245,000.

In its monthly house price report, Halifax revealed that the average price of a home increased to £245,747 in August. This is a 1.6% jump from the previous month, a 5.2% increase from the previous year, and the fastest annual rate since 2016.

However, Halifax also warned that it was unlikely that the strong price growth would be sustained. This is due to the expected rise in unemployment rates at the end of October, as well as a reduction of household earnings due to the pandemic.

Managing director of Halifax, Russell Galley, said: “A surge in market activity has driven up house prices through the post-lockdown summer period, fuelled by the release of pent-up demand, a strong desire among some buyers to move to bigger properties, and of course the temporary cut to stamp duty.”

There are also reports from estate agents describing buyers seeking out bigger properties, especially in coastal and country areas. This trend is being put down to the increase in the number of people working from home.

“Notwithstanding the various positive factors supporting the market in the short term, it remains highly unlikely that this level of price inflation will be sustained. The macroeconomic picture in the UK should become clearer over the next few months as various government support measures come to an end, and the true scale of the impact of the pandemic on the labour market becomes apparent,” added Galley.

The pandemic has pushed the country into the deepest recession ever recorded. Economists forecast a sharp rise in unemployment once the government’s furlough scheme comes to a close at the end of October. As a consequence, Galley said: “We do expect greater downward pressure on house prices in the medium term.”

The leading economic forecaster, EY Item Club, predicts a 3% fall in house prices by early 2021. Its chief economic adviser, Howard Archer, said the forecaster ‘does expect housing market activity to gradually improve from early 2021 as the labour market stabilises then starts to modestly improve and the UK’s economic recovery continues’.

The Halifax data comes after Nationwide reported record highs in August, with the building society revealing a 2% increase in house prices on its index. 

Harry Pererra
Harry Pererra

Harry turns on his experience in journalism and programming to write about the latest news in the world of tech and the environemtn. When he isn’t writing for usave he is working towards his Blue Belt in Brazilian Jiu Jitsu, and prefers dogs to cats.

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