UK house prices continue to rise: is it a good time to buy?

The latest Halifax House Price Index has revealed that house prices hit record highs in August. What does this mean for buyers?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

For Sale signs displayed outside terraced houses

Image source: Getty Images

The latest Halifax House Price Index revealed that the average house price in August hit a record high, with a monthly change of +0.7%. This set the average house price at £262,954 compared to the previous high of £261,642 recorded in May. It’s clear that house prices are continuing to rise, though at a slightly slower pace. Let’s take a closer look.

[top_pitch]

Is the number of home sales falling?

The end of the Stamp Duty holiday led to a plunge in the number of property transactions in July when compared to June. For this reason, we can safely assume that once the tapered stamp duty holiday ends, there could be a further drop.

Additionally, the end of the furlough scheme is around the corner. As a result, more people could yet lose their jobs, reducing the number of mortgage applicants.

The record-high house prices are also not that encouraging for aspiring homeowners. It seems likely that sales could drop further, though this could be offset slightly by government schemes that are still playing a significant role in making housing affordable.

[middle_pitch]

Will house prices continue to rise in 2021?

House prices have increased steadily throughout Q1, Q2 and Q3, mostly due to the imbalance between supply and demand. While the future is uncertain, it seems there could be a slight drop in Q4, owing to the end of the tapered Stamp Duty holiday and furlough scheme.

The average house price in August 2021 revealed that house price inflation is slowing. This was also evident in June and July 2021. The trend could continue in Q4, but this is not a guarantee that house prices will fall.

According to Joshua Raymond, director at financial brokerage XTB, “The Halifax House Price Index came in below expectations at 0.7% compared to the expected increase of 1.1%. Prices have been under increasing pressure after the index showed significant signs of slowdown in the last couple of months after a fairly stable increase throughout Q2.

“As overall inflation pressures continue to be a key issue followed by the Bank of England, along with other central banks, a continuation of the current trends could see the central bank stepping in and taking action even sooner than was previously expected.

“While a return to work and easing of lockdowns was expected to significantly boost property prices, it seems as if there are still some major hurdles the UK economy has to contend with.” 

Should you buy a house now or wait until 2022?

House prices have been high for the better part of 2021, threatening to shut out aspiring buyers. But government schemes have still made it possible for many to afford homes.

Waiting to see whether house prices will fall in Q4 or even 2022 could be wise, but there are no guarantees. That’s why the ideal time to buy a house shouldn’t necessarily be dictated by the market. The best time to buy is when your finances allow you to do so comfortably.

Of course, it’s also important to consider your reasons for buying the house, regardless of the price. Another consideration is what buying a particular house at a particular time could mean for your finances in the future.

If you’re in a strong position to buy, we’ve put together resources and tools you might need to consider when applying for a mortgage. Additionally, it’s always a good idea to get financial advice from professionals to ensure you don’t make poor decisions that have far-reaching consequences.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »