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Latest UK house price jump could ‘scare off first-time buyers’




The latest house price data suggests that many people who do not yet own property will not do so for quite some time.

The cost of the typical UK home has risen to more than £250,000 for the first time, according to Halifax.

The UK’s largest mortgage lender, part of Lloyds Banking Group, said residential property prices in October were 7.5% higher than a year ago, adding to the gap between income and house prices, which has sky-rocketed in recent years.

Lucy Pendleton at James Pendleton estate agents is among those concerned that a growing number of younger people are giving up on the idea of ever owning their own home.

She said: “Average house prices may have crashed through a quarter of a million pounds for the first time but the growth rate that got them there is frankly ridiculous.

“There seems little prospect that house prices are really rising this fast nationally, and it’s a dangerous thing to be saying, unless true, because it can scare off first-time buyers, who are the lifeblood of the market.

“The huge demand that has driven the market higher has been fuelled by armies of buyers pumped up by impatience, adrenalin, frustration and relatively cheap borrowing.

“That’s what will take the credit for this continuing surge in prices but we won’t see figures like this for long if we’re lucky.”

Jonathan Hopper, CEO of Garrington Property Finders, believes that the latest property price data provides “eye-catching news”, but also accepts that the existing rate of capital growth simply “can’t last”.

He commented: “The sharp slowdown in the monthly rate of price growth suggests several regional markets are approaching a high-water mark.

“The stamp duty stampede – in which buyers have been racing to complete their purchases before the chancellor’s tax break ends – has boosted prices and, in the most desirable areas, detached the property market from economic reality.

“In many ways, a reality check would do the market some good. Too many buyers are being tempted to overpay just to secure a tax discount, and losing sight of the fundamentals of buying.”

On the surface this is one of the greatest bull runs in the UK property market, according to David Westgate, group chief executive at Andrews Property Group.

However, he believes that a “giant bear is looming on the horizon”.

“You can feel its presence in the negligible monthly growth rate of just 0.3% compared to September,” he said. “After a surge led by post-lockdown demand, the stamp duty holiday and a desire to relocate for extra lockdown space, the market is now in cool down mode.”

The rate of change month-on-month has slowed considerably since the more significant movements recorded earlier this summer.

As one of the few sectors which remains ‘open for business’, the smarter agents are now turning their attention to nurturing conversations with buyers and sellers who are planning to transact from January onwards, according to Sam Hunter, chief operating officer of Homesearch.

Hunter believes that “holding complex chains together to ensure that those who can complete before the end of March next year are able to do so” provides agents with one of the greatest challenges at the moment.

Hunter said: “With the majority of buyers rushing to beat the stamp duty deadline, it’s tempting to think that Rishi Sunak will extend the current date of March 31st in a similar way to his last minute announcement this week of the extension of the furlough scheme.

“Arguably however, the Treasury will need all the income it can generate to recoup its spending to deal with the pandemic, so it’s quite possible that everything will return to normal on April 1st, taking the steam out of rising values with it.”

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