House prices in the UK here likely to continue to increase for some time, despite already breaking all records and hitting a new high in May, according to Halifax. The UK’s biggest mortgage lender said that the average selling price rose by £22,000 year on year in May, as the stamp duty holiday deadline approaches in a few weeks.
Halifax’s monthly snapshot of the property market in the UK showed a 1.3 per cent increase in the cost of a home in May, taking the average selling price to a record £261,743, according to Reuters.
The mortgage provider said that almost £22,000 had been added to the average house price since May 2020, when the housing market was reopened during the easing of the first lockdown in the UK. This marks an annual increase of 9.5 per cent, the fastest rate of growth in seven years.
The report echoes similar findings from a survey by Nationwide last week, which showed prices rising 10.9 per cent year on year, the fastest rate since August 2014.
Russell Galley, Halifax’s managing director, said: “Heading into the traditionally busy summer period, market activity continues to be boosted by the government’s stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline, after which there will be a phased return to full rates.”
He added that prices may continue to rise after the end of June, when the stamp duty holiday comes to an end, as some Brits have built up ‘unexpected’ savings during the lockdown that could now be used to fund larger deposits on bigger properties.
That is on top of a fundamental shift in the kind of homes that buyers are looking for in light of the pandemic, which has seen a boom in working from home, and an increase in interest in larger homes with gardens outside of city centres.
“These trends, coupled with growing confidence in a more rapid recovery in economic activity if restrictions continue to be eased, are likely to support house prices for some time to come, particularly given the continued shortage of properties for sale,” Galley said.
The strongest growth was recorded in Wales, where house prices grew 11.9 per cent to an average of £190,345 over the past year, marking the largest increase since April 2005.
However, the sound of England, which traditionally is the driving force behind national house price growth, has lagged behind the rest of the country.
This includes Greater London, where house prices are 3.1 per cent higher than in May 2020 but have a much slower rate of growth than the rest of the country due to the previously mentioned desire for larger properties in rural areas and suburbs.
Recent surcharges on stamp duty for non-UK residents and concerns about the long-term effects of Brexit have also taken their toll on London’s housing market.
“It should not be forgotten that London property prices were already extremely expensive, having experienced a boom following the global financial crisis, a phenomenon not felt by many other UK regions and nations to anywhere near the same extent,” Galley said.
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