A typical home in the UK will now set buyers back more than a quarter of a million pounds, as house price inflation hits a new high.
This is according to the latest data from Nationwide which revealed prices have continued rising, despite the end of the Stamp Duty holiday, with October seeing a monthly increase of 0.7%.
Over the year, prices have soared by 9.9% to push the average above the quarter-of-a-million threshold to £250,311.
Nationwide said, since the pandemic struck, average house prices have gone up by more than £30,000.
Robert Gardner, Nationwide’s chief economist, attributed the significant climb in prices to the low supply of homes and high demand.
He explained: “Demand for homes has remained strong, despite the expiry of the stamp duty holiday at the end of September. Indeed, mortgage applications remained robust at 72,645 in September, more than 10% above the monthly average recorded in 2019.
“Combined with a lack of homes on the market, this helps to explain why price growth has remained robust.”
Interest rate rise
There has been wide speculation this week that interest rates will increase as the Bank of England adjusts its base rate up from the low of 0.1%.
Robert thinks this rise would be ‘limited’ and the impact would be ‘modest’.
However Lucy Pendleton a property expert at estate agent James Pendleton, said the forecasts of a base rate rise were providing more impetus for people to purchase a home.
“The market remains solid because there are still plenty of reasons to buy now rather than wait,” she said.
“We may be a month on from the end of the stamp duty tax break but a near-certain string of interest rate rises over the next 18 months is proving to be a far more powerful motivation to transact than the stamp duty holiday ever was.
“Concerns over rising inflation have eclipsed the handout as a key driver of demand and you don’t have to be a genius to figure out that locking in an attractive 10-year mortgage rate now may be the best financial decision you ever make.
“First-time buyers are particularly eager to do so. Having only ever known rock-bottom interest rates, there’s a little fear of the unknown incentivising them to act quickly now.”
