UK house prices increased 9.5% in the year to May, boosted by the government’s stamp duty holiday which ends this month.
The Halifax said prices rose by more than £22,000 to an average of £261,743.
But it said buyer preferences are shifting “in anticipation of new, post-pandemic lifestyles”.
“There’s greater demand for larger properties with more space,” said Halifax managing director Russell Galley.
According to Halifax, annual house price inflation was at its strongest level in nearly seven years, with UK prices rising by 1.3% month-on-month.
Low borrowing and affordability is giving buyers more purchase power, which is placing upward pressure on property prices.
Nicky Stevenson, managing director at Fine & Country, commented: “This market is moving so fast that if you blink, it increases in value. It is incredible to watch when desire wrests control away from other factors during periods of exceptionally high demand like this and it could be about to get even busier.
“There are still some nervous homeowners out there who have been waiting for restrictions to ease before making their move, threatening to ratchet up the level of competition even higher over the next couple of months.
“If the unlocking goes ahead later this month, this new blood, which until now has been cautious due to the pandemic, will enter the market and there will be even more buyers chasing the must-have properties of the year, namely detached homes with plenty of outside space.
“Stamp duty relief will be scaled back at the end of June but don’t expect this to have much impact. The behaviour of buyers driving house price growth at the top end nationwide still supports the view that they are solely focused on the horizon and not concerned with saving a relatively small amount of money on a purchase.
“If the change to the stamp duty relief creates even a wrinkle in July that would come as a bit of a surprise.
“The market normally has a lull in the summer months but, now almost all foreign holidays appear to be off, there’s nothing stopping the freight train that is unbridled demand from crashing straight through June, July and August. It would take someone with a lot of courage to bet against this run of records being extended in June and even July.”
Iain McKenzie, CEO of The Guild of Property Professionals, said: “Britain’s estate agents are almost running out of homes to sell as the moving frenzy continues to gather pace!
“Increased demand coupled with a shortage of properties for sale have caused prices to soar higher than the savings made from the stamp duty holiday, meaning many houses are selling for a premium.
“While you’re enjoying the summer sun, spare a thought for the poor conveyancers who are overwhelmed by an epic backlog of paperwork.
“The slow phasing out of the stamp duty holiday is unlikely to calm the market, and house prices are likely to keep rising for the foreseeable future.
“Whatever happens, the rest of the summer has the potential to be a topsy-turvy time for the property market.”
The latest house price igures demonstrate how record demand is continuing to drive pricing, according to Stuart Law, CEO of the Assetz Group.
He commented: “While many predict house prices to taper off once the stamp duty holiday ends later in the year, we expect to see continued growth of up to 10% for both 2021 and 2022 at least.
“This is because changes in lifestyle preferences driven by the pandemic are likely to remain relevant long after economic support ends. People are looking for more spacious homes, further from city centres and closer to green spaces where they can continue the hybrid way of life that they have become accustomed to over the last year. However, there is a clear lack of appropriate housing stock in the right locations to meet these specific needs.
“Strength of demand is reigniting the housebuilding sector, while confidence is growing on the back of proposed planning reforms, particularly amongst the SME housebuilding community which is uniquely placed to harness its local knowledge to build the housing stock required in the locations where it is most needed.”
Comments (12)
CORRECTION
EA are running out of houses in high demand areas.
There are millions of flats waiting to be sold.
Most are unsellable until they have all been remediated from the cladding and construction defect issues.
That will take decades to resolve.
Millions of flat owners face bankruptcy and lenders will suffer massive losses with repossessed and valueless properties.
The effects of which could cause a run on the banks.
There are also plenty of houses available in low demand areas.
There are streets of empty houses in the major Northern towns.
But primarily the flat market needs to made viable.
I wouldn’t currently bother buying any flat even if you paid me to.
A FREEHOLD house is all I would be interested in.
It would also have to have a rear garden.
Otherwise not interested.
Millions of people are after the same thing.
No wonder that in high demand areas there is a lack of supply of suitable freehold houses.
Agree with most of that
I wonder how many LL would sell if say £15000 of CGT to be paid was in fact reflected in a £15000 reduction in price to a FTB?
Effectively a £15000 price reduction paid for by Govt.
I’m sure many LL would take full advantage of being able to offload all the dud properties that haven’t a hope of economically achieving EPC C status to a FTB.
At least Govt would achieve some CGT as LL take advantage of their properties being made affordable due to not having to pay £15000 CGT.
However it is a achieved people must be mugged into becoming OO.
There needs to be a much smaller and profitable PRS.
More OO and more homeless tenants is what is required.
Shelter etc will hardly campaign for more private housing providers to house millions of homeless!!!
They want fewer LL.
Incentivising LL to sell to FTB would be electorally worthwhile.
Nobody cares about homeless tenants if they have been replaced by OO.
I doubt Govt will offer such a CGT incentive to make LL properties affordable to FTB.
But it could be a very useful catalyst to make things affordable for FTB.
Govt just has to decide whether it is prepared to lose £15000 in CGT.
But if LL don’t sell then no CGT is paid.
At least my way Govt realises some CGT and makes things more affordable for FTB.
Nobody cares what happens to tenants.
Excellent points, though far too complicated to realise, this ship needs about 300 miles to turn
Yep I totally realise I suggest fantasy possibilities as you are totally correct.
But worth a punt!
Shelter tried it and they have managed to abolish the AST and S21.
.NO mean feat!!
In reply htsnom, the pandemic has made the government subsidise virtually everything and everyone (to the point that people are now reluctant to go back to work and would rather have 80% for nothing than 100% for at least a 40 hour week) and this in our industry means stamp duty hols have helped push prices to over heating, there are people that will lose their jobs once the subsidies end and as Robert has pointed out above, there is only so far you can push prices before you hit breaking point and true too of Bless you’s point, we have probably earned 2 years money, I’m not sure about 3, in 10 months or so and all good things most of the time have to come to an end, even so my point was that its on the cards and I dont like kiddology from the likes of upper management as that only puts pressure on the team working on the high streets etc, the people in the offices make the money and the people in the head offices make the pressure and stress and the kiddology is always coming from the HQ until its time for blame and reckoning and that always, absolutely always comes from upon high downwards, the sun shone and we made hay but lets not kid ourselves, cliff edges were being discussed at the last SDLT deadline and nothing much has changed now except we are nearing deadlines on salary subsidies et al enough said.
I’m not saying you’re wrong, but I am struggling to conceive the circumstances in which a crash would visit us, note crash, not correction.
Worst market in my professional life 2008 hands down, credit crunch, no money anywhere, everything being squeezed economically in the name of austerity, lenders terrified to be the cheapest and relishing the opportunity to say no. Paid your twenty quid mobile phone bill on a wednesday when it should of been tuesday? No mortgage for you sunshine, as the americans would say ” bad cop, no donut ”
removing liquidity is a fait accompli, the market has to dive because of the laws of physics, 20% on my patch over around 18 months.
We could not be further from this situation now, money is being thrown at everything.
As an aside, I do not see the reluctance to get back into full time work that you describe either at grass roots or upline, I dont think that people attracted to and finding home in this industry are wired like that, if they are they are swiftly found out pandemic or no pandemic.
The title is correct but that’s about all agents need to know.
We work on units… People aren’t selling which is squeezing prices..
I need 10 sales a month not 3…
Incoming bomb coming very soon…
My guess is we had 3 years of market in 8 months.. very dangerous for agents.
And the BS keeps rolling on! Does that include all the reduced prices that keep coming through?
All those that lose their jobs will affect the market and all those waiting to stimulate the market after the horse has bolted will come out of the woodwork too along with the window shoppers and the tyre kickers, honestly, talk about trying to keep a flogged horse going after it’s past the post but it’s your job to talk the market up even though you know it’s going to crash very soon.
Genuine question, why do you think there will be a ” crash ” ?
In the South West the exodus from London and the home counties contributed a >15% spike in prices with people bringing forward their plans to leave the capital and South East. Many of those have multiple memorandums of sales and are stalling their solicitors either while they ride the market where they are selling to give them a few extra £’s or to protected them from being gazumped and not having a property to move to.
Cement is is short supply where a builder will get through 12 silos of cement a month they are being rationed to 2, Copper ring main has gone from £30 a roll to £70, there’s no roofing batten, plasterboard or 2nd fix….. 1:3 new builds is the end of a chain. If the house can’t be completed nor can the chain.
Then there’s the inflationary pressure of increased asset prices, at some point something has to be done to control inflationary push. If that is a rise in interest rates all hell lets loose.
I hear you, but a rise in interest rates assuming not pernicious does no more than bring parity between the costs of ownership and tenancy….