House prices hit record high after rising at fastest pace in eight months

Average cost of home jumps to £225,109, a rise of 4 per cent for the year and an all-time record high

Some experts cast doubt on the figures, which contrast with those from Nationwide and Rightmove (Daniel Lynch)

UK house prices rose at their fastest pace since February, taking average values to a new record high, according to Halifax.

The typical home now costs £225,109, a rise of 4 per cent for the year, the building society’s figures showed.

Prices jumped 0.8 per cent in September alone, far exceeding the consensus prediction of no growth.

The news will be welcomed by homeowners who have seen a series of indicators that the market has slowed down and even gone into reverse in London.

Russell Galley, managing director, Halifax Community Bank, said house prices were being supported by an ongoing shortage of properties for sale and the high level of full-time employment.

Mr Galley said Halifax did not anticipate that an interest rate hike by the Bank of England not have a significant effect on the number of properties being bought and sold.

Some experts cast doubt on the figures, which contrast with those from Nationwide and Rightmove.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics said the surge was “impossible to reconcile with all the other housing market evidence”.

He pointed out that other surveys point to weak demand, with falling numbers of buyer enquiries for the last six months.

“Real wages still have further to fall over the next six months and mortgage rates will rise soon,” Mr Tombs said.

Meanwhile, the decline in Rightmove’s measure of year-over-year growth in online asking prices to just 1.1 per cent in September, from 3.1 per cent in August, indicates that sellers have little pricing power. As such, we expect most of the pickup in Halifax’s index to unwind over the coming months.

Howard Archer, chief economic advisor at EY ITEM Club, said the housing market “is likely to be hampered by fragile consumer confidence and limited willingness to engage in major transactions”.

Last week, Nationwide data pointed to falling London house prices for the first time in eight years. Across the UK the average price of a home increased at its slowest pace in more than four years in September, Nationwide said.

The news came shortly after Bank of England Governor Mark Carney gave his clearest signal yet that the central bank’s Monetary Policy Committee would raise its benchmark interest rate from 0.25 per cent.

A 0.25 per cent rise in mortgage rates would mean a person with a £200,000 loan on the average UK variable rate of 4.6 per cent would pay an extra £28.72 per month.

An increase of 1 per cent would add an extra £117.10 to payments, though this scenario is not expected to become a reality in the short term.