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House prices continue to rise as remortgage surge predicted

House prices have reached a record high once again this month, according to data from the Halifax House Price Index, with the average value now standing at £267,587.

It means a rise of 1.7% during September, following a run of three months of reducing values, and marks the strongest month-on-month increase for nearly 15 years.

“While the end of the stamp duty holiday in England – and a desire amongst homebuyers to close deals at speed – may have played some part in these figures, it’s important to remember that most mortgages agreed in September would not have completed before the tax break expired” said Halifax Managing Director Russell Galley.

“This shows that multiple factors have played a significant role in house price developments during the pandemic. The ‘race-for-space’ as people changed their preferences and lifestyle choices undoubtedly had a major impact.”

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In a surprising turn of events, the areas that see the highest average prices also saw the lowest increase in values throughout September, with London prices rising just 1% year-on-year.

Scotland continues to outperform the rest of the UK, with an increase of 8.3% to £188,525, in part due to the attractive options around extra space.

Even with fears of the market being artificially inflated, there is, however, cause for optimism for future valuations.

Against a backdrop of rising pressures on the cost of living and impending increases in taxes, demand might be expected to soften in the months ahead, with some industry measures already indicating lower levels of buyer activity” adds Galley.

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“Nevertheless, low borrowing costs and improving labour market prospects for those already in employment are likely to continue to provide support. Perhaps the biggest factor in determining the future of house prices remains the limited supply of available properties.”

“With estate agents reporting a further reduction in the number of houses for sale, this is likely to underpin average prices, though not the recent rate of price growth, into next year.”

While values continue to increase, market activity remains buoyant, with a lack of supply of new property being taken on by agents looking likely that the number of buyers per property seen in the early part of 2021 is likely to return, and potentially lead to a further window of opportunity for homeowners.

“With the perfect storm of a huge number of buyers along with record low interest rates, remortgage opportunities are likely to increase in the short term” says Andy McBride, director of Professional Contractor Mortgages. “January is due to be one of the busiest months on record for mortgage rate expiry dates, so many will be moving over to lender Standard Variable Rates early in 2022, likely to see significant increases in monthly mortgage payments.”

“With average timescales from application to completion on remortgage business currently sitting around two-months, now would be a good time to look at what your options are.”