House prices hit another record high in May with average now above £260k

Property prices reached another record high in May, with the average home adding more than £3,000 of value in the last month alone.

The typical home is now worth nearly £262,000 according to the Halifax price index – this is £22,000 or 9.5 per cent more than in May 2020.

Prices increased by £3,000 or 1.3 per cent between April and May of this year alone, although that was slightly lower than the 1.5 per cent growth the previous month.

Bricks and mortar: The price of a home in the UK is now more than £260,000 according to the latest Halifax House Price Index: an increase of £22,000 year on year

Bricks and mortar: The price of a home in the UK is now more than £260,000 according to the latest Halifax House Price Index: an increase of £22,000 year on year 

Halifax, one of Britain’s biggest lenders, said house price inflation was now at its strongest level in almost seven years.

Wales saw the strongest price growth of any region, with prices having increased by 11.9 per cent in the last year.

It was followed by the North West and Yorkshire & Humber, both of which posted double-digit annual growth.

For Wales and the North West, these are the biggest percentage gains since April 2005, and for Yorkshire & Humber since June 2006.

All regions bar the North East saw an acceleration in year-on-year house price inflation last month.

However, the South is lagging somewhat behind the rest of the country. 

In Greater London, average prices are still 3.1 per cent higher than a year ago but growing more slowly than the rest of the UK.

This has been influenced by a trend towards moving away from cities and into more rural areas during the pandemic, linked to working from home.

House price rises in the last year have been boosted by these kind of lifestyle changes, as well as the Government’s stamp duty holiday which has eliminated the tax on the portion of a property purchase under £500,000, saving home buyers up to £15,000.

House prices have increased by 9.5 per cent in the last year, according to Halifax

House prices have increased by 9.5 per cent in the last year, according to Halifax

House prices are being driven up in part by a shortage of properties on the market

House prices are being driven up in part by a shortage of properties on the market

The threshold will be lowered to £250,000 on 1 July, and then back to the normal level of £125,000 on 1 October.

Some experts are predicting house prices will fall after this deadline – but Russell Galley, managing director at Halifax, is more bullish. 

‘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 said. 

‘For some homebuyers, lockdown restrictions have also resulted in an unexpected build-up of savings, which can now be deployed to fund bigger deposits for bigger properties, potentially pushing property prices even higher.

‘Whilst these effects will be temporary, the current strength in house prices also points to a deeper and long-lasting change as buyer preferences shift in anticipation of new, post-pandemic lifestyles – as greater demand for larger properties with more space might warrant an increased willingness to spend a higher proportion of income on housing.

‘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.’

With the country tentatively unlocking and many families unable to go on foreign holidays, Nicky Stevenson, managing director of estate agent Fine & Country, is predicting the housing boom will continue throughout the summer. 

She said: ‘This market is moving so fast that if you blink, it increases in value. 

‘If the unlocking goes ahead later this month, this new blood, which until now has been cautious due to the pandemic, will enter the market and there will be even more buyers chasing the must-have properties of the year, namely detached homes with plenty of outside space. 

‘If the change to the stamp duty relief creates even a wrinkle in July that would come as a bit of a surprise.

‘The market normally has a lull in the summer months but, now almost all foreign holidays appear to be off, there’s nothing stopping the freight train that is unbridled demand from crashing straight through June, July and August.’

Cheap mortgage borrowing and a shortage of homes coming on to the market are also helping to push up prices.  

Tomer Aboody, director of property lender MT Finance, said: ‘Stamp duty holiday or not, the housing market has never been at this level before and will continue to be so while interest rates are so low. 

‘With buyers looking for more space, coupled with a lack of supply, multiple purchasers per property are pushing up prices to new highs.’

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source: dailymail.co.uk