UK house prices increase at fastest rate since 2004

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UK house prices increase at fastest rate since 2004

The average UK house price was up by 7.1% in April compared with the same month in 2020, to a record of £238,831. Photograph: Peter Atkinson/Alamy

High demand and low supply could create conditions for housing super-boom, says Nationwide

House prices in April rose at the fastest rate since 2004 as the UK faces a potential sales “super-boom”, with buyers rushing to take advantage of the extension of the government’s stamp duty holiday.

The average UK house price rose 2.1% in April compared with March, the biggest monthly rise recorded in 17 years, according to the mortgage lender Nationwide.

The frenzy of activity in the property market pushed the average UK house price up by 7.1% in April compared with the same month in 2020, to a record of £238,831. The average UK home is worth £15,916 more than a year ago.

The annual rate of growth was up on the 5.7% recorded in March, and just below the peak rate recorded during the coronavirus pandemic of 7.3% in December.

“Just as expectations of the end of the stamp duty holiday led to a slowdown in house price growth in March, so the extension of the stamp duty holiday in the budget prompted a re-acceleration in April,” said Robert Gardner, the chief economist at Nationwide.

The UK’s biggest building society said high demand and the limited number of homes on the market could fuel a summer boom, with double-digit percentage growth in annual house prices a possibility by June.

“The combination of high demand and low supply could create the conditions for a housing super-boom the likes of which we haven’t seen since the early 2000s,” said Iain McKenzie, the chief executive of the Guild of Property Professionals.

The market is also being boosted by the low cost of borrowing, with the government encouraging lenders to offer first-time buyers 95% mortgages by offering a guarantee scheme running until the end of 2022.

Last month, the chancellor, Rishi Sunak, extended the stamp duty holiday on houses sold for less than £500,000 in England and Northern Ireland until 30 June. After that, it will be reduced to £250,000 until 30 September, before returning to its original level of £125,000.

“Housing market activity is likely to remain fairly buoyant over the next six months as a result of the stamp duty extension and additional support for the labour market included in the budget,” Gardner said. “With the stock of homes on the market relatively constrained, there is scope for annual house price growth to accelerate further in the coming months.”

Andrew Wishart, property economist at the consultancy Capital Economics, said an acceleration in annual house price growth into double digits over the summer was now “all but guaranteed”.

He added: “With the economy set to recover quickly and interest rates very low, we don’t think that the current surge in house prices will be followed by a correction.”

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Source: The Guardian

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