Annual UK house prices surged by 13.4% in the year to June, the fastest rate of growth for 17 years. This is biggest the annual rise in prices since November 2004, the BBC reports. This is based on the latest figures released by the Nationwide Building Society. All areas of the UK showed growth, with London prices increasing by 7.3%.
The average price of a UK home rose 0.7% in June from May, to reach £245,432. This brings the annual rate of growth from 10.9% to a near record-breaking 13.4%, according to the Nationwide monthly report.
The residential property market has been running hot for several months, which is good news for anyone looking to make a quick house sale. Activity has been driven partly by the stamp duty holiday, which was announced by the chancellor last summer to reverse the sales slump at the onset of the pandemic, and has been extended to the end of June.
Homebuyers are also reassessing their lifestyles, as the work from home revolution triggered by the lockdowns has led to a rush for more space. Former city office workers, freed from time-consuming commutes, are seeking to relocate to greener suburbs or even to new lives in the countryside.
Robert Gardner, the Nationwide chief economist, said:
“While the strength is partly due to base effects, with June last year unusually weak due to the first lockdown, the market continues to show significant momentum. Indeed, June saw the third consecutive month-on-month rise, after taking account of seasonal effects. Prices in June were almost 5% higher than in March.”
Northern Ireland and Wales made the strongest gains in the second quarter, at 14% and 13.4% respectively. Scotland and inner London performed less well, at 7.1% and 7.3% respectively. Commuter towns, particularly in the south-east, such as Luton, Watford, Sevenoaks, and Woking performed strongly.
The outer south-east region, comprised of cities such as Brighton and Hove, Oxford, Winchester and Southampton, saw gains of 10.9%, and the south-west saw house prices grow by 10.4% year on year, the highest level since 2010.
Market experts will be keeping an eye on the end of the stamp duty holiday, which saw the level at which tax has to be paid on property purchases raised from £125,000 to £500,000 in July 2020. This means homebuyers could potentially save up to £15,000. From June 30 until September 2021, there will be a staggered return to the previous stamp duty rates.
Some industry insiders are predicting that the end of the tax breaks will have little to no effect on the housing market, as other factors have taken over, including low interest rates, low housing stock, accidental savings accumulated during lockdown, and the desire to move out of towns and cities, and have more space.
However, other analysts will be watching to see what happens when the furlough scheme ends, which may lead to a rise in unemployment rates. Some people have been benefitting from mortgage holidays, and with extra financial support being withdrawn in September, they may have to sell their properties quickly.