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UK house prices hit an all-time high in August after rising at their fastest rate in more than 16 years, according to the Nationwide building society.
House prices rose 2% in August – the largest monthly increase since 2004. Prices were 2.7% higher than in August 2019, the biggest annual jump since February 2017.
The average property price in the UK is now £224,100 ($US298,047).
Nationwide’s chief economist, Robert Gardener, said the housing market had suffered when coronavirus hit, but the rebound was “unexpectedly rapid.” Pent-up demand following lockdown was one of the reasons for the market bouncing back, he said.
UK buyers have benefited from the suspension of stamp duty, a tax on buying homes, which was announced by Chancellor Rishi Sunak in July to try to boost the market in England and Northern Ireland. Anyone buying a home of up to £500,000 before March 31, 2021 will pay no stamp duty.
A ban on house viewings also came to an end on May 13, 2020, allowing buyers to explore more of the market.
Research from Nationwide suggests that 15% of people are considering moving house as a result of the pandemic, and Ruth Lea, an economic advisor at Arbuthnot Banking Group, told Business Insider that working from home is causing buyers to reassessing their priorities and housing needs. Houses offering more green space in the countryside or in coastal regions are in high demand, June data from property portal Rightmove showed.
Experts warn the rapid recovery of the housing market may not last. Lea said rising unemployment due to the ending of the government’s furlough scheme, which paid the wages of staff temporarily laid off during the pandemic, and the return of stamp duty will cause prices to slip next year.
But prices will not “collapse,” provided the UK economy recovers quickly, she added.