According to the latest Halifax survey, buyers are ignoring Brexit uncertainty as UK house prices soar at their fastest rate for eight months in September
The Halifax survey highlights a 4% price rise in the three months to September compared with the same period last year.
This contradicts the trend of other recent reports which suggested a weakening market – especially in London.
Over the month, house prices rose by 0.8% in September to an average of £225,109, the highest on record.
Although this was down on the 1.5% increase witnessed the previous month, it was far better than the 0.1% rise expected by analysts.
The Halifax survey warns that a reduction in spending and rising prices could stifle future demand, but it believes the housing market was “unlikely” to be adversely affected by any future interest rise by the Bank of England (BoE).
Russell Galley, MD, Halifax Community Bank, said: “While the quarterly and annual rates of house price growth have improved, they are lower than at the start of the year.
“UK house prices continue to be supported by an on-going shortage of properties for sale and solid growth in full-time employment.
“However, increasing pressure on spending power and continuing affordability concerns may well dampen buyer demand.
“There has been recent speculation on the possibility of a rise in the Bank of England base rate – we do not anticipate this will have a significant effect on transaction volumes.”
The Halifax survey is divergent from other reports, with some analysts saying the sudden surge is tough to reconcile with all the other housing market evidence.
Halifax’s measure is acknowledged as the most volatile of all indexes to track, with the standard deviation of month-to-month changes over the last four years being two to three times higher than the official and Nationwide indices respectively.
Other surveys show that the pipeline of demand is soft.
The Royal Institution of Chartered Surveyors, for instance, has reported that new buyer inquiries have fallen in six of the last seven months.
Russell Quirk, founder and CEO of eMoov.co.uk, said the index showed the market enjoying “somewhat of an Indian Summer” and starting to gain momentum again.
“This momentum is unlikely to regress despite the on-going spectacle of Britain leaving the EU.
“In addition, while an increase in interest rates seems very likely over the coming months, they are already at such a low level that any increase is likely to be marginal and insignificant when it comes to impacting or deterring buyers.
Bjorn Howard, group CEO of housebuilder Aster Group, warned that while another rise in house prices might be welcomed by homeowners – it wouldn’t be welcomed by the millions of people hoping to take their first step on the housing ladder.
“Our research shows eight in ten UK adults believe high prices and prohibitively expensive deposits mean first-time buyers are now effectively frozen out of the market.
“Yet people are unaware of alternatives to saving to buy in the traditional way and a life of renting.
“Shared ownership homes offer choice and the chance to own equity in a property without a huge up-front deposit – but millions simply don’t know the product exists or understand its benefits – some even think it means sharing their house with someone else.”
“This has to change if we want a UK housing market that works for everyone, not just those who already own a home,” he said.
You can view the entire survey here.