House prices are booming or on the brink of a plunge into the abyss depending on who you want to take notice of.
While the Halifax and Nationwide are trumpeting about the fastest rise in prices for years, economists at the Office of Budget Responsibility predict a huge fall when the stamp duty holiday ends in the spring.
So, who is right and who is wrong?
The protagonists all have a financial interest in the outcome – the Halifax and Nationwide as Britain’s biggest mortgage lenders while the OBR analyse tax policy for the Treasury.
If you’re buying or selling, here’s a look at what’s happening in the market as the year ends.
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Fastest rise for house prices since 2004
More than £3,000 was added to the value of a typical home during November, says the Halifax House Price Index.
The price of an average property has soared by £15,000 to £253,243 since June and shows no sign of dropping.
That’s a 6.5% jump in five months and the most house prices have risen over that period since 2004.
Overall, house prices have surged by 7.6% in the year to the end of November – a 1.2% increase from October.
“With mortgage approvals at a 13-year high, the current market continues to be shaped by a desire for more space, the move from urban to rural locations and indications of a trend for more home working in the future,” said the Halifax managing director Russell Galley.
“And while industry data shows agreed sales and new instructions to sell fell to their lowest level in the past five months, both remain at historically high levels and well above seasonal norms.
“As the March deadline for the stamp duty holiday approaches, properties sold to home-movers recorded a much higher rate of annual house price inflation (+7.9%) than first-time buyers (+5.8%). It is interesting to note that the stamp duty saving of £2,500 on a home costing £250,000 is now far outweighed by the average increase in property prices since July.”
There may be trouble ahead, says Nationwide
Data from the Nationwide’s House Price Index is almost the same as that from the Halifax for once.
The Nationwide index often returns figures that differ from other mortgage lenders, but this time there’s little to separate them.
Average house prices were up 6.5% year-on-year in November – the highest rate of increase since January 2015.
The price of an average home increased by £1,895 to £229,721.
“October saw property transactions rise to 105,600, the highest level since 2016, while mortgage approvals for house purchase in the same month were at their highest level since 2007 at around 97,500,” said Robert Gardner, the Nationwide’s Chief Economist.
“The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy.
“Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.”
Record demand from house buyers
Estate agents reckon housing demand is at the highest for more than a decade with just over 400 buyers looking for a home registered with each branch.
That’s 20% up on the average 320 throughout 2019 and eclipses the most recent high of 379 in 2015, while the average a decade ago was 260.
Data analysis shows estate agents have the same number of homes to sell for the past two years – an average 39 a branch, compared with 63 in 2010.
“We are confident this boom will continue through the New Year but grow increasingly concerned about the impact of the property tax cliff edge on 31 March 2021,” said National Association of Estate Agents chief policy advisor Mark Hayward.
“It has already increased pressure on service providers within the industry, causing delays for buyers and sellers, and could cause thousands of sales to fall through at the final hurdle as buyers realise their sale will not be completed ahead of the deadline.”
No change in house prices expected in 2021, says Zoopla
Online property portal Zoopla expects house prices to stick around current levels in the New Year.
The web site’s house price index reports growth of 3.5% in a year – with prices forecast to go up 1% next year.
“It has been a roller coaster year for the housing market which is ending on a strong note with demand and sales agreed still more than 30% higher than this time last year,” said Zoopla research and insight director Richard Donnell.
“The high volume of sales agreed this autumn will spill over as completed sales in the first quarter of 2021 which will support the overall number of sales completed next year at 1.1 million. It has been a remarkable turnaround and completed sales this year look set to fall just 6% short of 2019 despite a two-month closure of the market in England.”
House Price Digest FAQ
The figures for average house prices and movements in property values can be confusing if you don’t know how to read the data.
Here some of the most asked questions about house price indices.
Why are the average property prices different in each report?
The reports use different data to draw their conclusions and take the data from different periods.
The Nationwide and Halifax indices are based on their customer data, which are much smaller samples than the national data analysed by the ONS.
Acadata’s methodology includes analysis that no other index uses.
Each organisation collects data over different time periods – the Nationwide and Halifax are for the year to September, while the ONS is to the end of July.
What is the average house price?
There’s no such thing as an average home. The figure is simply math calculated from the total value of all transactions in the sample divided by the number of homes changing hands.
Which house price index is the best?
They are all flawed because of the nature of the restricted data they are based on, but the one with the broadest sample comes from the ONS. However, the ONS data is usually the last to market and out of date by three months on publication.
More information
We have more statistics and information about investing in a property for England and Wales.
