Residential property prices in the UK accelerated in August, with values now 13% higher than before the pandemic, according to the latest data from Nationwide.
The building society said that annual property price growth sped up, to 11%, with the average home costing £248,857, with signs that prices could rise further.
According to the figures provided by Nationwide, property prices recorded their second largest month-on-month rise in 15 years, up by 2.1%.
The Nationwide’s chief economist, Robert Gardner, said: “As we look towards the end of the year, the outlook is harder to foresee. Activity will almost inevitably soften for a period after the stamp duty holiday expires at the end of September.”
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House prices in the summer usually see a dip as people’s attention turns to summer activities, but August has defied all odds with.
Nicky Stevenson, managing director at Fine & Country, commented: “This latest spike is stunning given that most analysts expected prices to decelerate as the stamp duty holiday entered its final throes going into the autumn.
“Those forecasts have now all proved wrong, and after a bumper summer which featured record borrowing, growth in Britain’s housing market still shows no sign of dampening.
“While the stamp duty holiday savings on big homes is quickly vanishing, a greater proportion of market activity is now in the mass market sector, buoyed by the resurgence of buy-to-let investing and first-time buyers.
“It is these sectors that continue to power double digit growth across the country.
“Based on this latest data, the market may well be running red-hot for some time to come, fuelled by low cost of borrowing, shrinking housing supply and government incentive schemes for first time buyers.
“The boom goes on.”
The widening supply-demand imbalance has also been a major factor in the housing market.
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Sam Mitchell, CEO of online estate agent Strike, said: “Let’s not forget that although the stamp duty holiday has ended, there is still a huge supply and demand imbalance issue in the UK, and the incentives that are still available – like the stamp duty savings still to be had for houses under £250,000 – are driving this imbalance further.
“The other incentives on offer will no doubt contribute to this too, with increased availability of 95% mortgages and low interest rates just some of the things that buyers can take advantage of. And who knows, the government might also have something planned to keep the market moving, but only time will tell!”
Lawrence Bowles, director of residential research at Savills, concurred: “There’s more to the housing market than stamp duty. Nationwide’s latest figures show robust house price growth in August, even with a less generous, tapered stamp duty holiday.
“Housing demand is still strong and the supply coming to the market is limited. There were 19% fewer homes listed for sale in the first half of August compared to the average for 2017-19, according to our analysis of TwentyCi data. There were 8% more sales agreed over that same period.
“As a result, we expect strong price growth to persist through 2021, though annual growth figures will ease back as we start counting growth from a higher, post-lockdown base. We expect annual house price growth to settle around 9% by the year end, with no reason to anticipate a correction in the coming years, particularly given the widely held view that interest rates will continue to remain low for the foreseeable future.”
Marc von Grundherr, added: “We’re seeing no let up in the extreme levels of house price growth seen in recent months. These hot market conditions are likely to remain beyond the summer months and well into autumn as we enter what is traditionally one of the busiest times of the year for the UK market.
“Of course, a slight dip can be expected come the end of the year. But those running for the hills at the first sight of a marginal monthly decline will do well to remember that even the best performing markets are subject to seasonal influences.”
By MARC DA SILVA
Source: Property Industry Eye
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