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?

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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.


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.


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.

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