Asking home prices have reached record highs in all parts of Britain, the latest figures show, though some experts have questioned whether the pandemic boom is finally starting to fade away.
The price of properties put on the market rose 0.8% month-on-month in June to a third consecutive record high of £ 336,073, according to data from Rightmove, a property listings website.
This was June’s biggest increase in the Rightmove Index since 2015. However, the huge increase in sales from the pre-pandemic period appeared to be fading somewhat. The number of sales agreed in May was 17% higher at the same point in 2019, after April sales were up 45% from two years earlier.
Economists and housing insiders have been surprised – and in some cases bewildered – by the strength of the UK house price spike during the Covid crisis. Andy Haldane, the chief economist at the Bank of England, said this month that the UK housing market was “on fire” due to government tax breaks as well as increased demand from wealthier households with more savings after closings. There has also been a demand for more space since the coronavirus hit, which has further increased prices in some areas.
Tim Bannister, director of real estate data at Rightmove, said there were “the first signs of a frenzied slowing down” of home sales – although this was in part due to the high prices associated with the number of homes on the market. sale hitting all-time low.
“Record interest rates and stamp duty relief have helped many people afford higher prices, satisfying their pent-up desires for a new home fit for a new era,” Bannister said. “Some of that demand has now been met, and the phasing out of stamp duty relief has also removed some of the urgency to relocate, although our high traffic and research data indicates that there is still a strong demand from buyers. “
Rightmove’s data is based on asking prices of homes on its platform. Separate data from the Office for National Statistics based on purchases made shows lower average house prices, but gives a similar picture of a warm market.
ONS data showed house prices peaked at £ 256,000 in March 2021, but with sharp price increases in all four of the UK’s countries. Its measure of the average UK house price fell to £ 251,000 in April, but it was still £ 20,000 more than in April 2020.
The outlook for house prices has been complicated by the extension of the end of the stamp duty holiday. The holiday, introduced by Chancellor Rishi Sunak when it emerged that the pandemic could cause prices to drop, has been criticized for fueling the spike in house prices as buyers rushed to buy to enter before the deadline.
The threshold at which stamp duty begins in England and Northern Ireland will be reduced from £ 500,000 to £ 250,000 on July 1. Then, in September, it will drop back to the pre-pandemic level of £ 125,000.
The stamp duty holiday thresholds for Scotland and Wales have been set at £ 250,000. In Scotland it ended on March 31, while in Wales it was extended until June 30.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, a consultancy firm, expects house prices to hit a new high in September, then fall sharply in October and end the year up by just 1% over one year.
“Prices would fall 1% in October, if the effective tax hike was fully capitalized in prices,” Tombs said. “But a larger drop seems plausible, as the property tax exemption on stamp duties has concentrated demand that would have materialized over a longer period. “