House prices hit record high in October as average home hits £323,500, says Rightmove

THE average price tag on a home hit a record high of £323,530 in October, according to property website Rightmove.

Asking house prices rose by 1.1% compared to September – up by £3,534 from £319,996 in one month.

The rise means they are now 5.5% (£16,818) higher than last October's average price tag of £306,712 – marking the biggest rate of increase for more than four years, the property portal said.

A temporary stamp duty holiday, which launched in July and is available until March 31 next year, has helped boost the property market following the coronavirus lockdown.

It's positive news for sellers who can cash in on buyers with bigger budgets but potential homeowners risk paying over the odds if the house price boom doesn't last.

The price index by Rightmove comes after house prices saw their biggest monthly rise in 16 years in August, according to Nationwide's index, and mortgage approvals reached their highest for 13 years.

What is stamp duty?

STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.

Up until July 8, most house-buyers in England and Northern Ireland had to pay stamp duty on properties over £125,000.

This was temporarily increased to £500,000 until March 31, 2021 in the government's mini-Budget in July 2020.

The rate a buyer has to fork out varies depending on the price and type of property.

Rates are different depending on whether it is residential, a second home or buy-to-let, or whether you're a first-time buyer.

The usual system in England for residential properties means:

• First-time buyers pay nothing on properties below £300,000 (and relief available on properties of up to £500,000)
• You pay nothing if the property costs below £125,000
• You pay 2% if it is worth between £125,001 and £250,000
• You pay 5% if between £250,001 and up to £925,000
• You pay 10% if it is between £925,001 and £1.5million
• You pay 12% on anything over £1.5million

For second homes or buy to let properties:

• 3% on purchases up to 125,000
• 5% on purchases between £125,001 and £250,000
• 8% on purchases above £250,001 and £925,000
• 13% on purchases above £925,001 and £1.5 million
• 15% on purchases above £1.5 million

Stamp duty rates are different in Scotland and Wales.

House prices then rose again in September, up 0.9% on August and up 5% on the same month last year, which was the biggest yearly rise since 2016.

The Rightmove index is recorded monthly, but others that are recorded over a longer period of time give a more accurate picture of house prices.

The property portal now predicts the annual rate of price growth could peak at around 7% before the end of this year.

Meanwhile, other experts believe the mini boom won't last much longer, with some suggesting house prices could fall after October.

This is when the government's furlough scheme is due to end, signalling an uncertain time for workers.

Hundreds of thousands of jobs are believed to be inline for redundancy once the financial support is pulled.

Currently, some sellers may also be getting too optimistic about what people will pay for their homes, according to the latest research.

What help is out there for first-time buyers?

GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.

Help to Buy Isa – It's a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there's a maximum limit of £3,000 which is paid to your solicitor when you move. These accounts have now closed to new applicants but those who already hold one have until November 2029 to use it.

Help to Buy equity loan – The Government will lend you up to 20% of the home's value – or 40% in London – after you've put down a 5% deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.

Lifetime Isa – This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25% on top.

Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25% to 75% of the property but you're restricted to specific ones.

"First dibs" in London – London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.

Starter Home Initiative – A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20% discount by 2020. To receive updates on the progress of these homes you can register your interest on the Starter Homes website.

Tim Bannister, Rightmove's director of property data, said: "Previous records are tumbling in this extraordinary market, and there are still some legs left in the upwards march of property prices."

He added: "Many buyers seem willing to pay record prices for properties that fit their changed post-lockdown needs, though agents are commenting that some owners' price expectations are now getting too optimistic.

"Not only is the time left to sell and legally complete before the March 31 stamp duty deadline being eaten away by the calendar, but more time is also needed because the sheer volume of sales is making it take longer for sales that have been agreed to complete the process.

"Sellers and their agents should therefore be wary of being too optimistic on their initial asking price, as whilst activity levels continue to amaze, there are some signs of momentum easing off from these unprecedented levels."

Rightmove said that despite the effective market closure between late March and mid-May, 2% more sales have been agreed so far this year than in the same period in 2019.

The average time to sell a property is also at a new record of 50 days, which is 12 days faster than a year ago.

The number of active buyers contacting estate agents in September was 66% up on a year earlier, only marginally down on a peak of 67% higher in July.

Mr Bannister added: "With the number of buyers contacting agents still up by two-thirds on a year ago, there is plenty of fuel left in the tank to drive further activity in the run-up to Christmas and into next year."

Meanwhile, Martin Robinson, director of estate agency Hunters, said: "We would normally see a slowing of the market as the nights draw in, but the appetite to take full advantage of the low interest rates and a stamp duty holiday means activity continues to grow.

"Demand is still outweighing supply, particularly for quality properties marketed at the right price, and we're regularly experiencing sales going to best and final offers.

"We're also seeing changes in the habits of the consumer, with many saying that there is no need to be on the doorstep of their workplace and are looking to move to a more rural or affordable location."

Looking to buy or sell a home? Check out our guide on what's next for house prices.

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