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Record high house prices suggest housing market boom is not over yet

Date: 07 December 2021

07 December 2021

If you are covering the latest Halifax House Price Index, please see the following comment from Karen Noye, mortgage expert at Quilter:

“The latest Halifax data shows house prices have once again continued to rise over the past month, with November seeing a new average house price record of £272,992. Not only is this a new record price, but on a rolling quarterly basis, growth has reached a fifteen-year high with an uptick of 3.4%.

“At this stage, two months post stamp duty holiday withdrawal, it was hoped we might finally see a downtick in house prices. The still rising prices demonstrates that while the scheme did have an impact on house prices, it was not the only driver. The race for space appears to still be going strong, and when combined with the current demand outweighing supply, prices are still being pushed higher.

“Interest rates will be key over the coming months, and an increase would push mortgage rates up which will likely put potential buyers off. However, the new Omicron variant may have thrown a spanner in the works of any major changes planned by the Bank of England, meaning we are unlikely to see a rate rise just yet. While that may be the case, rock bottom mortgage rates are likely to creep up as an interest rate rise is still anticipated, it is just a question of when.

“Those waiting out the housing market boom in hopes of lower prices will likely have to wait a while longer yet. Regardless of whether house prices begin to drop, the likely increase in mortgage rates will contribute further towards the unaffordability of homeownership. Those among the most heavily impacted will be first time buyers, who are often handed the highest mortgage rates from the outset due to typically having a higher LTV ratio.

“While we are unlikely to see a substantial drop in prices any time soon, they may slow as more potential buyers hold off while they wait out this tricky period of increased prices and interest rate decision making.”

Megan Crookes

External Communications Executive