House prices surged by 7.6% to £253,243 in the year to November, putting growth on the strongest run since 2004, the latest index from Halifax has shown.
Much of this growth has taken place since June, with prices increasing by an average of £15,000 or 6.5% in this time, marking the most substantial jump over five months for 16 years.
Annual growth was at its highest level since June 2016, while the month-on-month increase of 1.2%, was up from 0.3% in October.
These gains have more than wiped out the average savings from the stamp duty holiday.
Furthermore, the deteriorating economic picture points to a slowdown in the housing market next year, Halifax warns.
Halifax managing director Russell Galley says: “With mortgage approvals at a 13-year high, the current market continues to be shaped by a desire for more space, the move from urban to rural locations and indications of a trend for more home working in the future.
“And while industry data shows agreed sales and new instructions to sell fell to their lowest level in the past five months, both remain at historically high levels and well above seasonal norms.”
Galley says that house price inflation for home movers is running at 7.9%, which is much higher than the 5.8% annual growth in prices for first-time buyers.
This is probably driven by the March stamp duty deadline as those with higher value properties have more to gain from the tax break.
Galley adds: “It is interesting to note that the stamp duty saving of £2,500 on a home costing £250,000 is now far outweighed by the average increase in property prices since July.
“The housing market has been much more resilient than many predicted at the outset of the pandemic, and indeed many households remain confident about further price growth next year.
“However, the economic environment continues to look challenging.
“With unemployment predicted to peak around the middle of next year, and the UK’s economy not expected to fully recover the ground lost over 2020 for a number of years, a slowdown in housing market activity is likely over the next 12 months.”