Halifax have reported that UK house prices have reached a record high in May and look likely to continue rising for some time.
We explore what the data shows, which areas have been most effected and why we may see house prices continuing to rise, despite the nearing of the first phasing out of the stamp duty holiday.
What does the data show?
Data from Halifax has shown the average selling price has rose by almost £22,000 since the housing market opened back up in May 2020, after the first lockdown. The average selling price now sits at £261,743, with May itself seeing a 1.3% increase in house prices.
With the demand for housing being so high due to buyers racing against time to complete before the start of the wind down of the stamp duty holiday, this is partly responsible for such an increase in the average selling price.
Halifax also hinted that despite UK house prices reaching a new record high in May, it’s likely they will continue rising for some time, potentially past the final end date of the stamp duty holiday, which is currently the end of September.
The 9.5% annual increase in house prices stated by Halifax is similar to that reported by Nationwide, who showed UK house prices rising 10.9% year on year, which is the fastest rate of growth since August 2014.
Where saw the most growth?
Halifax recorded the strongest growth in Wales, where house prices grew 11.9% over the past year, to an average of £190,345, the largest increase since April 2005.
The South of England, including Greater London, has lagged behind, however. House prices are 3.1% higher than last year, with the slower growth explained by a growing appetite for larger housing in more rural surroundings.
London’s housing market has also been greatly affected by the increase in stamp duty charges for overseas investors and concerns over how Brexit will affect the market over the longer term.
What has been said about the data?
Halifax managing director, Russell Galley, said, “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.”
He also stated that it’s likely UK house prices will continue to rise after the end of June, with people building up ‘unexpected’ savings during the lockdown, which can now be used to fund larger deposits on bigger properties.
People’s housing priorities have also changed in light of the pandemic, with a lot of workers being able to do their job remotely and so now moving away from the city centre, in search of larger houses with a garden.
“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”, Galley told.
Commenting on the slower house price growth in London, Galley said, “It should not be forgotten that London property prices were already extremely expensive, having experienced a boom following the global financial crisis, a phenomenon not felt by many other UK regions and nations to anywhere near the same extent”.