UK house prices hit record after 8.1% surge in a year
London
A SHORTAGE of homes for sale and a buoyant labour market are expected to underpin the UK housing market as consumers come under pressure from soaring inflation and higher interest rates, according to Halifax.
The average cost of a home rose 0.9 per cent in October to a record £270,027 (US$491,196), the mortgage lender said on Friday (Nov 3). That left values 8.1 per cent higher than a year earlier, the fastest annual gain since June.
Demand for property remained buoyant last month, despite the ending of a temporary tax cut on purchases introduced by the government last year. That suggests other factors are playing a significant role, including strong employment and a pandemic-driven search for larger homes away from urban centers.
Halifax cautioned that the market is set to lose some momentum, however, as households grapple with a sharp squeeze on living standards.
"With the Bank of England expected to react to building inflation risks by raising rates as soon as next month, and further such rises predicted over the next 12 months, we do expect house buying demand to cool in the months ahead as borrowing costs increase," said Russell Galley, managing director at Halifax.
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The central bank warned on Nov 4 that inflation is set to reach 5 per cent next April and that interest rates will have to rise in coming months, piling pressure on family budgets. Some lenders have already increased mortgage costs. House-price inflation for first time buyers has reached a 5-month high of 9.2 per cent, overtaking the equivalent measure for homeowners, Halifax said. BLOOMBERG
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