The average UK house price hit a record high of £245,000 in October – also marking a £13,000 increase on a year earlier – according to official figures.
House prices increased by 5.4% over the year to October, up from 4.3% in September, according to the Office for National Statistics (ONS), which said a stamp duty holiday may be allowing sellers to request higher prices.
The ONS said this is the highest annual growth rate the UK has seen since October 2016.
England, Scotland and Wales all saw record high average prices in October.
Average house prices increased over the year in England to £262,000 (a 5.4% annual increase), in Wales to £176,000 (5.8%), in Scotland to £163,000 (6.0%) and in Northern Ireland to £143,000 (2.4%).
The average UK house price was Â£245,000 in October 2020 (up from Â£244,000 in September 2020).— Office for National Statistics (ONS) (@ONS) December 16, 2020
This is Â£13,000 higher than the same period a year ago https://t.co/bzBhyMao7S pic.twitter.com/vTgEsxffto
Within the English regions, the East Midlands, the North West and Yorkshire and The Humber experienced the joint highest annual growth in average house prices, at 6.6%.
The lowest annual growth in England was in the East of England, where average prices increased by 3.4%.
London house prices remain the most expensive at an average of £491,000.
The North East continued to have the lowest average house price in England, at £136,000. It remains the only English region yet to surpass its pre-economic downturn peak in July 2007.
The ONS said its latest price data will reflect the impact of the stamp duty holiday which was introduced in July.
Its index is based on house sales that have completed, and transactions typically take six to eight weeks to go through.
Stamp duty applies in England and Northern Ireland, but similar property tax cuts have been introduced in Scotland and Wales.
The report said: “The tax holiday is due to end on March 31 2021 across the whole of the UK. This may allow sellers to request higher prices as buyers’ overall costs are reduced.”
The report said recent price increases may also reflect factors including pent-up demand following the initial coronavirus lockdown and some possible changes in people’s housing preferences since the pandemic.
There have been signs of people searching for properties with more space.
The ONS said the average price of detached properties has increased by 6.8% in the year to October, while the price of flats and maisonettes has increased by 2.3% over the same period.
The start of the new year could mark a turning point as the March stamp duty holiday cut-off looms largerPaul Stockwell, Gatehouse Bank
Paul Stockwell, chief commercial officer of Gatehouse Bank said: “A perfect combination of pent-up demand, the stamp duty discount, savings accumulated during lockdown and a desire for many to move to properties with more homeworking and outdoor space has propelled buyers onto the front foot and driven prices to a record high.
“Mortgage commitments are still being made at their highest levels since the financial crisis, and there are yet to be any signs of this demand levelling off.
“However, the start of the new year could mark a turning point as the March stamp duty holiday cut-off looms larger.
“Professionals across the industry, from estate agents to banks and brokers will be hard-pressed to get applications across the line in time, but there is a risk that a growing backlog could result in purchases going beyond the deadline and agreements falling through as buyers reconsider the value for money represented by their purchases.”
Anna Clare Harper, chief executive of asset manager SPI Capital, said: “What happens next to sales volumes and prices will be a product of our economy, regulatory changes and of course, the success of the coronavirus vaccination programme.”
We're already seeing signs of this property frenzy cooling offNicky Stevenson, Fine & Country
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The market is still buzzing with deals to be done. Lenders remain keen to lend, with big names returning to the high loan-to-value (LTV) space, giving more choice to first-time buyers.
“Lender willingness to offer high LTVs again suggests that they don’t foresee a total collapse in property prices next year.”
Nicky Stevenson, managing director at Fine & Country said: “We’re already seeing signs of this property frenzy cooling off.
“In fact a lot has changed in the past two months. The initial surge of buyers motivated by a desire for more space and the chance to capitalise on the stamp duty holiday has already now passed.”
She continued: “Significant outright price falls remain unlikely in 2021, although the appetite for larger properties is here for the long haul and will continue to disguise the underlying performance of the market to some degree.”