House prices are likely to continue rising for some time despite hitting a new record high in May, one of Britain’s biggest mortgage lenders has said.
The monthly snapshot of the property market from Halifax showed a 1.3% jump in the cost of a home in May, taking the average selling price to a record £261,743 as homebuyers raced to complete purchases before the stamp duty holiday begins to run down at the end of this month.
Halifax said almost £22,000 had been added to the average house price since May 2020, when the UK experienced the first easing of national lockdown restrictions, and the gradual reopening of the housing market after a temporary freeze. It marks a 9.5% annual increase, the fastest rate of growth in seven years.
The report echoes similar findings from a survey by Nationwide last week, which showed prices rising 10.9% year on year, the fastest rate since August 2014. Commentators note that, heading into the traditionally busy summer period, market activity continues to be boosted by the government’s stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline, after which there will be a phased return to full rates.
Prices could continue to rise after the end of June, given that some Britons had built up “unexpected” savings during lockdown that could now be used to fund larger deposits on bigger properties. That is on top of a fundamental shift in the kind of homes that buyers are looking for in light of the pandemic, which has ushered in a home working boom and fuelled interest in larger homes with gardens outside city centres. These trends, coupled with growing confidence in a more rapid recovery in economic activity if restrictions continue to be eased, are likely to support house prices for some time to come, particularly given the continued shortage of properties for sale.
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