UK house prices rise by almost £5,000 in August

The Nationwide building society reports an increase of 2.1% as stamp duty holiday winds down in England and Northern Ireland meaning a house prices rise of almost £5,000 in August. The property market continues to boom even after a partial

The Nationwide building society reports an increase of 2.1% as stamp duty holiday winds down in England and Northern Ireland meaning a house prices rise of almost £5,000 in August. The property market continues to boom even after a partial end of the government’s stamp duty holiday with the average cost of a home increasing by £4,468 to £248,857, the second highest in 15 years.

Expectation had been that house prices would see a slow down after the threshold for paying stamp duty was halved from £500,000 to £250,000 at the end of July, however, year-on-year property inflation rose to 11% in August, up from 10.5% in July.

Continued Growth

One reason suggested by Nationwide for the continued strength of the market is the lack of properties available which means prices are pushed higher. Another reason could be that those buying homes under the £250,000 threshold are seeking to complete their purchase before the stamp duty rate reverts to its pre-COVID norm of £125,000 in October.

The combination of record low interest rates, the stamp duty holiday provided by the chancellor and the demand for more space during the pandemic have all contributed to the fact that average UK house prices have risen 13% since the start of the pandemic 18 months ago.

Last month’s rise followed a contraction in of house price sales in July which saw sales slow by two thirds after the scaling back of tax breaks for new buyers, Nationwide said price growth had shrunk by 0.6% before the August rebound.

Robert Gardner, Nationwide’s chief economist, said: “The bounce back 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.”

Rises to continue

Nationwide expects the trend in house prices rising  to continue in the short-term because of a rebound in consumer confidence alongside tight supply of properties. However, the outlook for the property market by the end of the year is “still clouded”.

It said that a slow down in the market was “almost inevitable” when the stamp duty holiday winds down and if demand stalls towards the end of the year due to a rise in unemployment when the government assistance schemes come to an end. However, even this is far from assured as the labour market has remained buoyant and the shifts in housing preferences due to the pandemic continue to support the market activity.

Tom Bill, the head of UK residential research at Knight Frank, said: “The housing market has clearly lost none of its core strength, and rising business confidence and rock-bottom interest rates signal a strong end to the year, even as the stamp duty holiday winds down completely.”

Lucy Pendleton, from the estate agents James Pendleton, said: “This is a timely lesson that it’s the fundamentals of the market that are all-powerful still. Sunak’s generous state handout has turned out to be more a demonstration of misdirection than crisis management.

“The market didn’t need his money and, with hundreds of billions tucked away in accidental savings, Britons are continuing to satisfy a deep-seated determination to move after a traumatic 18 months.”

Homebuyer Survey

For now, the housing market looks strong, with a lack of stock being the fly in the ointment. If you want to move for more space as your working pattern has shifted to working from home, buy your first home or you have decided that you would like to move out of the city centre, whatever the reason, then asking for the expert opinion of a RICS Chartered Surveyor means that you will have a much clearer idea of what you are buying.

A Homebuyer Survey provides an independent report of the overall condition of the property you may wish to buy, allowing you to make an informed decision on whether you wish to proceed with the purchase. Avery and Co can also provide you with an independent valuation of the property to allow you to decide whether you feel it is worth your investment.

Buying a house is a stressful process and one that Avery & Co can help you with. We will talk you through your Homebuyer Survey ensuring you understand what it all means, putting you in a strong position to go back and renegotiate the price if there are issues that need to be sorted.

Visit our website to find out about our full range of services, or give one of our friendly team a call to find out more 0151 321 2000  We have RICS surveyors across the north west and north Wales with local knowledge of their areas who would be happy to help.