The average price of a home in the UK is at a record high but demand could slow as a result of policies in Rachel Reeves’s budget, Britain’s biggest mortgage lender has said.
Halifax’s monthly house price index found that the cost hit £293,999 in October, the highest ever recorded, outstripping the £293,507 reached in June 2022.
The 0.2% rise in October is the fourth consecutive month of house price growth, and brought the annual growth rateto 3.9%, from 4.6% in September.
The figures suggest that homebuyers shrugged off concerns about what would be contained in Reeves’s debut budget, which was delivered at the end of October. However, Halifax said measures included in the chancellor’s speech could affect future demand.
Amanda Bryden, head of mortgages at Halifax, said that, while it was a surprise that house prices had passed the level seen in June 2022, particularly with the headwind of higher interest rates, it was more noteworthy that prices had not fallen significantly since that point.
In June 2022 the country was coming out of the pandemic and there was pent-up demand to buy homes, and what Halifax calls a “race for space” for buyers, she said.
Halifax also said it had seen market activity improving recently, despite the continued affordability challenges around higher mortgages, with the level of mortgages agreed at its highest level in two years.
However, Bryden said the rate at which mortgage rates will continue to fall will be hindered by policies put forward by the chancellor in her budget last week.
She said: “Following the budget, markets expect the Bank of England to cut rates more slowly than previously anticipated, which could keep mortgage costs higher for longer. New policies, like higher stamp duty for second homebuyers and a return to previous thresholds for first-time buyers, might also affect demand.”
While the lender expected house prices to keep growing, that growth would be “at a modest pace for the rest of this year and into next”.
As part of the budget, Reeves increased stamp duty on buy-to-lets and second homes from 3% to 5%, and scrapped the temporary increase on purchase price for nil rate of stamp duty, the sale figure before consumers have to start paying the tax.
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The nil rate for first-time buyers will decrease £450,000 to £300,000, and for those buying an additional home from £250,000 to £125,000.
Northern Ireland continued to be the area of the UK with the highest price growth, with the average property costing £204,242, up 10.2% on the previous year.
The north-west was the region of England with the strongest price growth, up 5.9% on last year, with properties now costing £235,587 on average.
In London the average property now costs £543,308, up 3.5% on last year.
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