House prices up for now but uncertainty remains

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Halifax has found that a ‘sharp increase’ in July has pushed house prices to their highest ever levels.

The average price of a house is now put at almost £242k, up 3.8 per cent on July 2019, it reported in its latest house price index.

Even so, ‘uncertainty remains with likely greater downward pressure on prices in the medium term’, it concluded.

‘Following four months of decline, average house prices in July experienced their greatest month on month increase this year, up 1.6 per cent from June and comfortably offsetting losses in 2020’, said Halifax managing director Russell Galley.

‘The latest data adds to the emerging view that the market is experiencing a surprising spike, post lockdown. As pent-up demand from the period of lockdown is released into a largely open housing market, a low supply of available homes is helping to exert upwards pressure on house prices.

‘Supported by the Government’s initiative of a significant cut in stamp duty, and evidence from households and agents suggesting that confidence is currently growing, the immediate future for the housing market looks brighter than many might have expected three months ago. However, looking further ahead, there is still a great deal of uncertainty around the lasting impact of the pandemic. As government support measures come to an end, the resulting impact on the macroeconomic environment, and in turn the housing market, will start to become more apparent.

‘In particular, a weakening in labour market conditions would lead us to expect greater downward pressure on prices in the medium-term’.

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