07 November 2024
If you are covering Halifax’s latest House Price Index, please find the following comment from Holly Tomlinson, financial planner at Quilter:
“The Halifax House Price Index for October reveals that UK house prices have risen by 0.2% month-on-month, bringing the annual change to 3.9%. This represents a record average house price of nearly £294,000, just beating the previous high set towards the end of the pandemic’s race for space. Despite the increase, this latest data shows how budget uncertainty eased the year-on-year price growth, which had been 4.6% in September, as buyers and sellers braced for potential changes that could derail their plans.
“Following the budget, the government’s new 5% stamp duty surcharge on second homes marks a bold move to curb demand from buy-to-let investors and second-home buyers. The policy aims to make primary homeownership more accessible, especially in popular areas where house prices have surged due to demand for rental and holiday properties. However, with buy-to-let investors potentially being priced out, rental supply may tighten further, especially in already-competitive urban areas, adding fuel to the rental price surge.
“First-time buyers also face a narrowing window of opportunity due to changes announced last week. The government confirmed the current stamp duty threshold of £425,000 will drop back to £300,000 in March 2025. This looming deadline could spur a rush to buy, adding to market activity in the months ahead as potential homeowners look to beat the cut-off. Yet, with mortgage rates still elevated, affordability remains a challenge for many would-be buyers.
“Today’s Bank of England base rate decision adds yet another layer of interest for the housing market. While any changes will affect mortgage rates, particularly for those on variable and tracker deals, much of the anticipated base rate reductions have already been priced into fixed-rate products, so major rate shifts are unlikely right away. However, for borrowers on short-term deals or those nearing the end of their fixed-rate periods, today’s announcement could still shape refinancing options. Similarly, a decreasing base-rate plays a huge part in increasing buyer confidence. However, that said, borrowers just yesterday had to face a flurry of lenders pulling five-year fixed rate deals which may have been in response to the US election news or in anticipation of the Bank of England interest decision.
“With so many moving parts in today’s housing market, from policy shifts to evolving mortgage rates, now is an essential time for homebuyers and investors alike to look to get mortgage advice to ensure they are getting the best possible deal for their circumstances.”
