The latest Halifax House Price Index shows average UK property prices have hit a new record high of £272,992.
The value of the average UK property increased by 1%, or £2,808, in November; and the annual rate of inflation is at a 15-year high of 8.2%.
This is the fifth straight month that average house prices have risen, with typical values up by almost £13,000 since June, and more than £20,000 since this time last year.
Welsh average property prices have broken past £200,000 for the first time ever, with an average price of £204,148. Northern Ireland recorded annual growth of 10%, with an average house price of £169,348. House prices also continued to rise in Scotland, with the average property now up 8.5% year-on-year, and an average price of £191,140 – also the most expensive on record.
In England, the North West remains by far the strongest performing region (+11.4%), which is its highest rate of growth since 2005 (with an average house price of £209,287). London continues to lag the rest of UK in its rate of house price growth, with annual inflation of just 1.1%, though this was up slightly from October. However, at an average price of £521,129, properties in London continue to be much more expensive than in all other parts of the country.
Quarterly house price inflation is now at its strongest level since late 2006. On a rolling quarterly basis the increase in house prices was 3.4%.
Since the onset of the pandemic in March 2020, and the UK first entering lockdown, house prices have risen by £33,816, which equates to £1,691 per month.
Annual house price inflation for first-time buyers is at 9.1% compared to 8.8% for homemovers. And annual price inflation for flats (+10.8%) has been higher over the last year compared to slower gains for detached properties (6.6%).
According to Russell Galley, Managing Director of the Halifax, the performance of the market continues to be underpinned by a shortage of available properties, a strong labour market and keen competition amongst mortgage providers keeping rates close to historic lows. However, Galley also believes there is now greater uncertainty than has been the case for quite some time, with interest rates expected to rise to guard against further increases in inflation, adding:
“Leaving aside the direct impact of a possible resurgence in the pandemic for now, we would not expect the current level of house price growth to be sustained next year given that house price to income ratios are already historically high, and household budgets are only likely to come under greater pressure in the coming months.”
For those whose home is their prime asset, effective planning may be needed to reduce or provide for inheritance tax (IHT). The residence nil rate band (RNRB) will provide a solution for many married couples/civil partners with children, grandchildren or other lineal descendants. However, careful consideration should be given to its use in planning and the fact that it is reduced by £1 for every £2 where the deceased’s estate exceeds £2 million. Please see the residence nil rate band.
For those for whom the problem will remain, the answer may be provision for the liability through life assurance (joint lives last survivor for married couples/civil partners) in trust to those who will suffer because of the payment of the IHT.
You can read the full Halifax report here.
If you would like some advice on estate planning, please contact your financial planner here.
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Past performance is not a guide to future performance and may not be repeated. Capital is at risk; investments and the income from them can fall as well as rise and investors may not get back the amounts originally invested.
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