House prices up 8% in biggest jump in 5 years

House prices up 8% in biggest jump in 5 years
Credit: Jason Alden/Bloomberg

Low supply, low interest rates and ongoing demand are tipped to continue to support house prices which saw their highest annual growth rate in five years, according to the latest Halifax house price index.

The figures for April, published yesterday (May 10), showed house prices were 8.2 per cent higher year-on-year, marking the highest annual growth rate in five years.

On a monthly basis, house prices in April were 1.4 per cent higher than in March, reaching an average of £258,204.

Russell Galley, managing director at Halifax, said: “In cash terms, almost £20,000 has been added to the value of the average home since the market had essentially come to a standstill in April 2020.”

“The influence of the stamp duty holiday will fade gradually over the coming months as it’s tapered out but low stock levels, low interest rates and continued demand is likely to continue to underpin prices in the market."

But Galley added that the current levels of uncertainty and potential for higher unemployment as furlough support ends led the bank to believe that house price growth would slow towards the end of the year.

Miles Robinson, head of mortgages at Trussle, commented: “We’ve seen applications from first-time buyers increase by 106 per cent year-on-year. Next-time buyer enquiries, who have the most to gain from the tax break, have increased by 120 per cent.”

But Robinson said high demand was not only boosting prices but causing delays in processing times.

He said: “With less than 55 days until the stamp duty deadline, it’s unlikely that buyers starting a new transaction will complete in time.”

£650bn of equity available for release

Analysis of Halifax’s quarterly house price index from Canada Life meanwhile found the amount of equity available to release in homes in Q1 exceeded £650bn for the first time.

According to the lifetime mortgage provider, this marked an increase of £50bn based on the previous quarter, with higher prices in the South East and London driving the rise in potential available equity.

The provider’s analysis found close to £126bn of potential equity was available for release in the South East, equivalent to £110,700 per household.

London had £123.3bn of potential equity, equivalent to £161,300 per household.

RegionPotential equity release value availablePotential equity release value per household
South East£125.8 bn£110.7k
London£123.3 bn£161.3k
East Anglia£74.0 bn£94.9k
South West£64.2 bn£83.0k
North West£55.3 bn£62.2k
West Midlands£48.8 bn£69.6k
Scotland£40.7 bn£58.0k
East Midlands£40.1 bn£66.6k
Yorkshire and The Humber£37.7 bn£56.8k
Wales£24.9 bn£59.7k
North East£16.4 bn£47.4k
Q1 total£650.7 bn£870k
Potential equity release value calculated using max. LTV (as of Oct 20) for 70 year old for Canada Life’s Capital Select Super Lite product based on average regional house price and ONS population statistics. This has then been weighted based on English Housing Survey property ownership figures for those aged 55 or over - this was then applied to each region to calculate proportion of properties owned by those aged 55 or over.

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