Halifax building society has published its House Price Index for March 2021, revealing that house prices are now 6.5% higher than they were in March 2020 after a year of incredible demand in the midst of the pandemic.
The average price for a UK house is now £254,606 having risen by 1.1% since February.
Halifax found that house prices had increased by 1.1% between February and March 2021 and are now 6.5% higher than in March 2020.
This year of growth has been remarkable, and many experts are scratching their heads, trying to work out whether these prices can be sustained and supported, or whether prices will soon crash.
The government’s fiscal intervention, including the stamp duty holiday, is doing a lot to keep prices high by constantly driving demand, but Halifax has warned that the full economic fallout of the Covid-19 pandemic is yet to be felt.
Halifax Managing Director, Russell Galley, said:
“…with the economy yet to feel the full effect of its biggest recession in more than 300 years, we remain cautious about the longer-term outlook.
“Given current levels of uncertainty and the potential for higher unemployment, we still expect house price growth to slow somewhat by the end of this year.”
A lack of stock continues to plague the housing market – with too much demand and not enough available homes, prices are inflated, something which seems set to intensify due to the government’s 95% mortgage initiative.
While 95%-mortgages are designed to increase affordability for first-time buyers who cannot afford to save for a large deposit, the increased demand they are putting on the market is causing prices to surge. Somewhat ironically, this is making home ownership even less affordable for those people the 95% mortgages are designed to help.
Interest in the generous mortgage rate has been strong. Since the start of 2021, searches for 95%-mortgages have increased eight-fold, according to Mortgage Broker Tools.
Tanya Toumadj, CEO at Mortgage Broker Tools, said:
“This data…tells a very clear story. There is strong and growing demand for high LTV mortgages and an increasing number of products available to meet that demand. However, it is still difficult for customers to prove eligibility for those products as, when it comes to higher LTV loans, lenders take a much stricter approach to affordability.”