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According to the Nationwide building society, house prices rose by 0.8% in the month since September. The average house now costs £227,826; an increase of £12,458.
Demand increased dramatically through the summer and beyond, pushing house prices to a five year high. In the last year, prices have increased by 5.8%. This was a result of both the stamp duty holiday, and transactions being put on hold during the first lockdown.
But is this sustainable? The likelihood is that this rise is short-term, and the future looks decidedly uncertain as unemployment rises and the economy slows.
The future of house prices could fall sharply, depending on how the new measures announced to control the pandemic evolve over the coming weeks and months. An extension to the furlough scheme is likely. However, the pressure on businesses forced to close again will result in a weakened economy. This could potentially lead to further unemployment.
The chancellor has been urged to extend the stamp duty deadline beyond March 31st, as the fixed date is causing a rush in transactions. As a result, processing capacity, already reduced due to Covid restrictions, is falling further and further behind. It is possible that many buyers will miss the tax deadline altogether.
So, for all it appears that the housing market is riding high, the news must be met with caution. A realistic view of the future in these uncertain economic times needs to be borne in mind.
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Granite Building Warranties Ltd is an Appointed Representative of Richdale Brokers & Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority.
Granite Building Warranties is a company registered in England and Wales (Company Number 11497543) with its registered office at 1st Floor, 5 Century Court, Tolpits Lane, Watford, WD18 9PX.”