(Bloomberg) --
U.K. house prices increased in September at the fastest pace in more than 14 years and healthy demand is set to persist despite the headwinds facing the economy, according to Halifax.
The average price of a home rose 1.7% to 267,587 pounds ($363,000) following a 0.8% gain in August, the mortgage lender said Thursday. The increase was the largest since February 2007 and pushed up the annual pace of growth to 7.4%..
The housing market has boomed since the summer of last year, boosted by a tax cut on property purchases and pandemic-driven demand for larger homes away from city centers with space to work from home.
The stamp-duty holiday was scaled back in July and ended altogether on September, but many of the factors supporting the market remain in place. They include a continuing “race for space,” cheap borrowing, a lack of homes for sale, savings accumulated during lockdowns and a robust jobs market.
Much may depend on how consumers weather the storms currently buffeting the economy, with inflation accelerating, government support for furloughed workers ending last month and a tax increase looming next year to pay for the National Health Service.
“Against a backdrop of rising pressures on the cost of living and impending increases in taxes, demand might be expected to soften in the months ahead, with some industry measures already indicating lower levels of buyer activity,” said Russell Galley, managing director at Halifax. “Nevertheless, low borrowing costs and improving labor market prospects for those already in employment are likely to continue to provide support.”
Over the course of the stamp-duty holiday, house prices rose by more than 12 times the initial savings from the tax break, Halifax said.
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