The rush by buyers to complete before the stamp duty holiday started winding down pushed UK house prices to a record high in June, official figures show. House prices rose by 13.2% over the year to June, faster than at any point since November 2004, according to the Office for National Statistics (ONS).
Across the UK, the average house price in June was a record £266,000, up from £255,000 in May. This beat the former record, set in March 2021, by £10,000.
“In June, UK house prices saw their highest annual growth since 2004,” said ONS head of prices Mike Hardie. “This figure, however, was boosted by large monthly growth, with a rush to complete purchases before changes to the stamp duty holiday came into effect at the end of June.”
“The average price of UK houses now stands at a record £266,000, which is £31,000 higher than this time last year,” continued Hardie.
Prices increased the fastest in Wales over the year. The 16.7% rise there pushed the average price to £195,000. In England prices rose 13.3% to £284,000, in Scotland by 12% to £174,000, and in Northern Ireland by 9% to £153,000. For the seventh month running London was the region with the lowest annual growth, at just 6.3%.
Last July the Government said it would suspend the tax that buyers pay when purchasing a new home through part of the Covid-19 crisis. In England this meant that buyers would not have to pay any stamp duty on properties worth up to £500,000. In Scotland and Wales the threshold was £250,000. The stamp duty holiday was originally meant to come to an end on 31st March, pushing prices up to a then record high that month. But that deadline was extended to 30th June to avoid a sudden change that could have caused may sales to fall through. The stamp duty holiday was then tapered out by decreasing the threshold to £250,000 in England until the end of September.
Hugh Gibbs, co-founder of SearchLand, said: “House prices always consume a lot of attention in the UK, and that is particularly true right now, with homebuyers, investors and developers eagerly waiting to see the impact of the first stamp duty holiday deadline. Clearly, the ONS data shows us that even in the build-up to the deadline on 30th June, house price growth continued its rapid march upwards – although this is a trend that is unlikely to have continued into July and August.”
“The statistics underline that the stamp duty holiday has more than achieved its goals; it has incentivised a huge amount of transactional activity and fuelled growth across the property sector. And, while the remarkable surge in property values over the past 14 months will eventually come to an end, the predictions of a sudden market crash this summer have certainly not come to fruition.”
“Make no mistake, the market remains highly competitive even as the stamp duty holiday tapers down, with desirable properties and land still attracting a great deal of attention from prospective buyers. Do not expect this to change any time soon,” concluded Gibbs.
Jamie Johnson, CEO of FJP Investment, opined: “Will the bubble burst or won’t it? This remains the question on everyone’s lips. Today’s ONS data about June’s prices provides will only heighten this speculation, with the rate of growth reaching heights not seen for 17 years. That said, we should still expect for the market to undergo a steady deflation throughout the second half of the year, with prices stabilising, if not falling slightly.”
“For now, this data shows that house prices were still increasing rapidly as the first stamp duty holiday deadline arrived. What's more, should a dip in prices be revealed by newer data in the coming months, this should be welcomed, not feared. Some commentators will make bold claims about bubbles bursting, but the reality is that property industry would benefit from a period of sustained calm and predictability as the UK recovers from the effects of the pandemic,” continued Johnson.
“Bricks and mortar has performed strongly decade on decade, with perfectly natural peaks and troughs in between. So, even if the steep upward curve does flatten in the summer months, expect it to rise again in the years to come,” was Johnson’s closing observation.
George Franks of estate agents Radstock Property, said: “The exceptional price growth in Scotland, where the stamp duty holiday ended on 31st March, highlights how property transactions have been driven more by lifestyle changes than stamp duty savings. The pandemic has changed everything, with more people working remotely, and that is reflected in the level of annual price growth seen north of the border.”
“In many respects, the stamp duty savings have been a sideshow to the much bigger narrative of people wanting entirely different things from their homes.”
Jamie Durham an economist at PwC said: “There is an ongoing shift in preferences towards more spacious properties, affecting the mix of what is being purchased and pushing up average prices. Household savings have increased significantly for many during the pandemic, enabling buyers to put more towards their deposit and increasing the price they can afford.”
Jeremy Leaf, former residential chairman of RICS, commented: “This most comprehensive of all the housing market surveys confirms the rush to beat the beginning of the stamp duty taper, which we were seeing in our offices up to the end of June. However, the report is a little dated so it doesn’t show that the predicted price correction immediately afterwards failed to materialise.”
“There are fewer but more serious inquiries now with most potential buyers displaying a steely determination to proceed, with existing transactions rarely renegotiated or failing to complete.”
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