UK house prices jump by £5K unexpectedly in August
UK house prices rose by almost £5,000 in August as the property market continued to boom following the partial end to the government’s stamp duty holiday.
New data from Nationwide said the cost of the average home had increased by £4,628 to £248,857, a monthly rise of 2.1% – the second highest in 15 years.
Despite expectations that house price inflation would ease after the threshold for paying stamp duty was lowered from £500,000 to £250,000 in July, year-on-year property inflation rose to 11% in August, up from 10.5% the previous month.
Nationwide says the strength of the market in August was due to the lack of properties for sale and buyers of homes worth less than £250,000 seeking to complete purchases before the stamp duty threshold goes back to its pre-crisis norm of £125,000 in October.
The average UK house price is up by 13% since the start of the pandemic 18 months ago, due to record low interest rates, a demand for more spacious properties and incentives provided by Rishi Sunak.
Robert Gardner, Nationwide’s chief economist, said: “The bounceback in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market.”
He said the increase may reflect strong demand from those buying a property priced between £125,000 and £250,000 who hope to take advantage of the stamp duty relief before it comes to an end, combined with a low number of properties on estate agents’ books.
‘Demand may weaken’
Nationwide have warned the demand in the market may weaken in the coming months as government schemes – such as furlough – will come to an end.
“Underlying demand is likely to soften around the turn of the year if unemployment rises, as most analysts expect, when government support schemes wind down,” Gardner added.
Nicky Stevenson, managing director at Fine and Country, said: “This latest spike is stunning given that most analysts expected prices to decelerate as the stamp duty holiday entered its final throes going into the autumn.”
“Those forecasts have now all proved wrong, and after a bumper summer which featured record borrowing, growth in Britain’s housing market still shows no sign of dampening.”
“While the stamp duty holiday savings on big homes is quickly vanishing, a greater proportion of market activity is now in the mass market sector, buoyed by the resurgence of buy-to-let investing and first-time buyers.”
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