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House price rises continue to cool in February – Halifax

  • 05/03/2021
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House price rises continue to cool in February – Halifax
The average UK house price was £251,697 in February according to Halifax, as prices continued to cool off to start the year.


Having seen five months of consecutive strong growth in 2020, this is the third month of easing, with prices coming down slightly from the high of 252,890 in November.

However, on an annual basis prices are still 5.2 per cent higher than the £239,414 in February 2020 before the pandemic hit.

The results are somewhat of a contrast to those from Nationwide Building Society published earlier this week, which showed a 0.7 per cent increase in house prices in February after a January pause.

Halifax managing director Russell Galley welcomed the stamp duty holiday extension which “has removed a great deal of uncertainty for buyers with transactions yet to complete”.

And he approved of the 95 per cent loan to value mortgage guarantee scheme also announced in the Budget.

“While mortgage approvals have reached record highs in recent months, hitting levels not seen since before the financial crisis of 2008, raising a deposit continues to be the single biggest hurdle for first-time buyers to overcome,” he said.

Galley noted the housing market had been at a crossroads to start the year, with upcoming events such as the Budget key to determining the path of activity and prices.

“Having enjoyed an extremely strong period of activity in the second half of last year, the housing market continued its softer start to 2021, with average prices down very slightly compared to January,” he said.

“However, with annual house price inflation currently at 5.2 per cent, property values remain comfortably higher than 12 months ago, when February was the last full month before lockdown.”


Budget boost

Industry commentators expect the Budget announcements to reinvigorate the market and prompt more buyers and sellers to return in the short term.

Former Royal Institution of Chartered Surveyors residential chairman Jeremy Leaf said: “The slight softening in house prices contrasts with those from Nationwide earlier in the week.

“It shows the market pausing in February as many buyers and sellers were deterred by the prospect of not being able to take advantage of the stamp duty holiday, as well as being hampered by further lockdown restrictions.

“However, when it became clear from Budget leaks that there was a good chance of the concession being extended and further support for higher loan to value mortgages, the market perked up and gained in confidence, even though the extension is relatively short.”

MT Finance commercial director Gareth Lewis noted that it was a sustainable slowing, rather than values falling off a cliff.

“There is still a desire to transact and if people are less likely to pay over the odds, then all the better,” he said.

“The stamp duty holiday extension should help that trend. Price growth is great as far as capital appreciation is concerned for investors but it is hard for those trying to get on the housing ladder.

“As those trying to buy a home may have been furloughed for a time, we can’t live in a price bubble for too long.

“The 95 per cent mortgages announced in the Budget are a positive as they will help stimulate the market, encouraging first-time buyers which allows further transactions to happen up the ladder,” he added.


Not sustainable throughout 2021

In the longer-term, Galley highlighted that the performance of the housing market remains inextricably linked to the health of the wider economy.

“The pace and extent of recovery are still highly uncertain, and much will depend on the ongoing success of the UK’s vaccination roll out,” he continued.

“Though there is the likelihood of an economic bounceback from lockdown, with households not unduly impacted by the pandemic deploying the significant reserves of savings that they have built-up, higher unemployment is likely to limit new buyer demand.

“Therefore, we would not expect the level of growth seen in house prices over the past year to be sustained throughout 2021.”




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