UK house prices hit new record high

Average house prices across the UK reached a record high in August, even though the annual rate of price inflation slowed slightly, according to the latest property index from lenders Halifax.

There had been expectations that there could be a price slump over the summer with the government's pandemic-induced, stamp duty holiday starting to come to an end. But high demand from would-be purchasers and a shortage of properties on the market appears to have kept the year-long surge going.While house price inflation slowed to 7.1 per cent compared to July's 7.6 per cent, it still meant that the average hit an all-time high of £262,954. Compared to June last year, when the housing market started to reopen after the first Covid-19 lockdown, this August's record was £23,900 higher.The biggest rises were seen in Wales, which recorded an 11.6 per cent increase, while SW England saw a 9.6 per cent jump - probably a reflection of the continuing demand for rural properties, according to the Halifax.In NE England, property price inflation over the 12 months stood at eight per cent; at 8.4 per cent in Scotland; and at 9.3 per cent in Northern Ireland.Meanwhile, across Greater London, the annual increase stood at only 1.3 per cent last month and, over the rolling, three-month period to August, the capital was the only region to record a fall in prices - down 0.3 per cent.However, with average prices in London standing at £508,503, property prices in the capital remain considerably higher than other parts of the UK.
Russell Galley, managing director at the Halifax, said a key factor behind the new record was the "increasingly tight" supply of properties."Much of the impact from the stamp duty holiday has now left the market, as highlighted by the drop in industry transaction numbers compared to 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.“We believe structural factors have driven record levels of buyer activity – such as the demand for more space amid greater home working. 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.“Moreover, the macroeconomic environment is becoming increasingly positive, with job vacancies at a record high and consumer confidence returning to pre-pandemic levels."Coupled with a supply of properties for sale that looks increasingly tight, and barring any re-imposition of lockdown measures or a significant increase in unemployment as job support schemes are unwound later this year, these factors should continue to support prices in the near-term.”Nick Barnes, head of research at estate agency chain Chestertons, added: “We expect activity to pick up this month as there is still substantial unsatisfied demand for spacious homes, mortgage offerings remain attractive and buyers are keen to get their lives back on track post-lockdown.”

Read more news and views from David Sapsted.

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