House price gains seen since the start of the pandemic are unlikely to be reversed, according to new research from Halifax. There are benefits for both buyers and sellers in the property market right now…

The end of the stamp duty holiday has done little to subdue activity in the UK housing market. The latest figures in the Halifax house price index reveal property prices are now at a record high of £267,587. This is a monthly rise of +1.7%, and year-on-year it is a +7.4% increase.

The monthly house price growth was in fact the strongest since February 2007, a clear demonstration of the mood in the market. A number of factors are at play, according to housing industry professionals. For buyers, competition for properties is high, borrowing costs are low and there is a ‘race for space’ affecting housing trends.

City investments are “good value”

According to John Eastgate, managing director of property finance at Shawbrook Bank, there’s a lot more to the market’s recent resilience than stamp duty. This is why we should expect a continued hive of activity in the sector.

“Demand is strong, supply is constrained,” he comments. “There may be economic bumps in the road at present, but the long-term prognosis remains strong; borrowing costs are low and employment prospects are strengthening, so it is difficult to see any real threat to continued long term asset appreciation.”

Eastgate also believes that while people’s priorities are shifting along with their lifestyles, cities will always be a great investment option.

He adds: “The strength of price rises in Scotland and Wales is understandable given changing buyer priorities, however the lure of the big cities, notably London, will inevitably return, and they may represent good value right now for both homeowners and investors.”

Important to look at the bigger picture

As is always the case with house price indices, they should be taken lightly. They are a snapshot into the month’s figures and can be easily skewed by a myriad of factors. Analysing trends over time, as well as looking at regional and property type variations, is vital.

This sentiment is echoed by Tom Brown, managing director of real estate at Ingenious. He points out that positive economic data, increased job security and employment levels are all underpinning the house price trends.

He adds: “However the market is complicated when we look behind the headline numbers. While many segments continue to grow, city centre flats, for example, don’t always paint the same overall picture of demand which has reduced as people search further afield for more outside space, homes with gardens, practical workspaces and quality infrastructure.

“When analysing residential markets, it is key that we take a close look at the subsectors and the regions in which they are located. It can be misleading to look too broadly.”

Strong incentives to buy

Competition among buyers is strong at the moment. Lack of supply is one key cause of this, as well as pent up demand post-pandemic.

There are plenty of reasons why buyers are still flocking to the UK housing market. With house prices consistently rising, the sector is still a great investment option for those seeking reliable returns. For property investors and landlords, the rental market is also extremely strong. Demand continues to outpace supply according to research, meaning rental homes are unlikely to sit empty.

Lower than ever mortgage rates are another major incentive. This applies to both homeowners and buy-to-let investors who are borrowing to buy.

But time is of the essence, as Peter Beaumont, CEO of The Mortgage Lender, points out.

“Mortgage rates are at their lowest in years, but are likely to rise again when the economy is strong enough to withstand an increase in the base rate, so it’s important to make the most of what’s available now. Furthermore, with rents outside of London climbing at alarming levels, in many cases it’s now cheaper to buy a home than rent.

“Lucky buyers who secure a low fixed-rate mortgage will be beating escalating inflation rates and getting a foot on, or up, the housing ladder.”