UK house prices rise at fastest rate in five years ahead of stamp duty holiday deadline

·3 min read
Almost £20,000 has been added to the value of the average home since April 2020, according to latest figures. Photo: Shaun Curry/AFP via Getty
Almost £20,000 has been added to the value of the average home since April 2020, according to latest figures. Photo: Shaun Curry/AFP via Getty

UK house prices continued their ascent in April ahead of the stamp duty holiday deadline, gaining 1.4% compared with March and 8.2% compared with April last year. 

The jump is the highest annual growth rate in five years.

According to Halifax's monthly house price index (HPI), in the latest quarter (February to April) house prices were 0.9% higher than in the preceding three months (November to January). 

The average house price in the UK in April was £258,204 ($363,130). 

Watch: Why are house prices rising during a recession?

In cash terms, almost £20,000 has been added to the value of the average home since the market had essentially come to a standstill in April 2020.

“The stamp duty holiday continues to add impetus to an extremely active market, magnifying the current shortage of available homes as buyers aim to take advantage of the government scheme," said Russell Galley, managing director of Halifax. 

The influence of the stamp duty holiday will fade gradually over the coming months as it’s tapered out but low stock levels, low interest rates and continued demand is likely to continue to underpin prices in the market."

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Galley said Halifax expects recent levels of activity to continue over the short-term due to demand for homes with green space that are more suitable for working from home. 

Rob Gill, managing director of the independent mortgage broker, Altura Mortgage Finance: "There is a deep-seated FOMO in the market right now, a fear among buyers that they could 'miss out' if they don't hurry up and buy before prices spiral beyond reach. 

"As prices accelerate, it's certainly tempting to forecast it will all end in tears. However, history suggests that low interest rates, Government support and an improving economy are classic ingredients for house prices to carry on rising rather than crash.”

The news comes following new data from the Bank of England which showed mortgage borrowing in the UK hit £11.8bn ($16.4bn) in March, the strongest month since records began in 1993. The previous peak was in October 2006 at £10.4bn.

Mortgage approvals for house purchases were 82,700 in March, lower than the recent peak of 103,100 in November 2020, but higher than in February 2020 (73,000).

The data bolsters recent reports about the UK's stampede to buy homes before the end of the stamp duty holiday — a discount brought in by Rishi Sunak to support the market under strain from the COVID-19 pandemic.

The tax break can mean a saving of up to 12% on the UK's most expensive properties.

Figures released by housing website Zoopla at the end of April showed demand for UK property is up 27.5% year to date in 2021 when compared with average levels in 2020.

Watch: How much money do I need to buy a house?

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