UK house prices surge despite tax break end
The growth in UK house prices shows no sign of slowing down even with the partial removal of a stamp duty holiday in England.
The average UK house price reached a fresh record high in August while annual inflation cooled to a five-month low, after the partial end of the stamp duty holiday in England and the North.
Halifax, one of the UK’s biggest mortgage lenders, said the average cost of a property increased by 0.7%, or £1,789, to £262,954 (€307,000), topping the previous peak of £261,642 recorded in May.
The annual rate of house price inflation slowed to 7.1%, the lowest since March and down from 7.6% in July.
However, compared with June 2020, when the UK housing market began to reopen after the country’s first Covid lockdown, prices remain more than £23,600, or 9.9%, higher.
Prices have jumped the most in Wales, up 11.6% year-on-year and the only double-digit rise recorded in the UK during August.
The south-west of the country also recorded strong growth at 9.6%, probably reflecting the ongoing demand for rural living within the region, Halifax said.
Annual house price inflation in the north-east rose to 8% and Northern Ireland picked up to 9.3%, while price growth in Scotland slowed to 8.4%.
Greater London continues to lag behind the rest of the country, registering a 1.3% annual rise in prices in August, the smallest in 18 months.
Over the latest three months, it was the only region or nation to record a fall in prices, of 0.3%.
However, at £508,503, typical properties in the capital remain far above the national average national price.
Russell Galley, managing director of Halifax, said: “Much of the impact from the stamp duty holiday has now left the market, as highlighted by the drop in industry transaction numbers compared with a year ago."
"However, while such government schemes have provided vital stimulus, there have also been other significant drivers of house price inflation," he said.
He said structural factors had driven record levels of buyer activity, such as the demand for more space amid greater home working.
There is also a limited supply of properties for sale.
“These trends look set to persist and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break comes to an end later this month,” he added.
“Moreover, the macroeconomic environment is becoming increasingly positive, with job vacancies at a record high and consumer confidence returning to pre-pandemic levels,” he said.
Anthony Codling, an independent housing analyst, said: “Large numbers continue to look for more space to facilitate working from home and countless others are looking for additional homes to accommodate the emerging hybrid working from home model of two to three days in the urban office and two to three days in the rural or coastal idyll. Meanwhile, the number of homes for sale is not meeting demand and the outlook for prices is up not down.”
Last week, Nationwide building society said its data showed house prices jumped by 2.1% in August, a rise of almost £5,000, and annual inflation picked up to 11% from 10.5%, confounding expectations the market would slow after the threshold for paying stamp duty was lowered from £500,000 to £250,000 in July.
Tom Bill, head of UK residential research at Knight Frank, said: “The housing market has clearly lost none of its core strength, and rising business confidence and rock-bottom interest rates signal a strong end to the year, even as the stamp duty holiday winds down completely.”
“The labour market has remained remarkably resilient to date and, even if it does weaken, there is scope for shifts in housing preferences as a result of the pandemic to continue to support activity for some time yet," said Nationwide chief economist Rob Gardner.
• Guardian service
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