House prices reach ‘new record high’ of £238k with experts predicting a further surge

Laura Hamilton discusses rise in house prices

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The property market has continued to boom across the UK with prices accelerating despite the uncertainty surrounding the coronavirus pandemic. Government initiatives such as the stamp duty holiday, 95 percent mortgages and the furlough scheme have helped to boost the current market. According to new figures from Nationwide, annual house price growth rebound to 7.1 percent in April, from 5.7 percent in March.

Annual growth will also reach dupable digits in June if prices remain flat over the next few months.

The average UK house price now stands at a whopping £238,831, an increase of £6,697 on the month before.

Nationwide’s chief economist Robert Gardner said the extension of the stamp duty holiday in Chancellor Rishi Sunak’s Budget has promoted “reaccelerating” in April.

However, the property expert said the stamp duty holiday is not actually the main factor motivating them to move house.

Three-quarters of homeowners surveyed in April said they were either moving house or considering moving home said the would have been the case even if the SDLT holiday was not extended.

For many, the coronavirus pandemic and its subsequent lockdowns have made homeowners re-evaluate their priorities.

Many buyers are now looking for more space outside major cities and a garden.

Mr Gardner has predicted that the housing market is likely to remain fairly buoyant over the next six months thanks to Government support.

Like many experts recently, Mr Gardner said there is scope for annual house price growth to accelerate even further in the next few months.

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He continued: “Further ahead, the outlook for the market is far more uncertain.

“If unemployment rises sharply towards the end of the year as most analysts expect, there is scope for activity to slow, perhaps sharply. “However, shifts in housing preferences may continue to support activity, even if labour market conditions weaken.

“Indeed, at the end of April, 25 percent of homeowners surveyed said they were either in the process of moving or considering a move as a result of the pandemic, only modestly below the 28 percent recorded in September last year.

“Given that only around five percent of the housing stock typically changes hands in a given year, it only requires a relatively small proportion of people to follow through on this to have a material impact.”

Matthew Cooper, Founder & Managing Director of Yes Homebuyers, seemed to be more sceptical of the stamp duty holiday.

He said the property market has managed to “side step the stamp duty cliff edge for now”.

He added: “However, it’s now clear just how influential it has been in boosting market health and so when the clock does finally expire, there’s no doubt we will feel the impact.

“This will come in the form of a dramatic reduction in transaction levels, followed a few months later by a sharp dip in the rate of house price growth.”

Meanwhile, managing Director of Barrows and Forrester, James Forrester, said the stamp duty holiday has helped “turbocharge” the property market.

“As a result, we’re seeing some remarkable levels of price growth driven by heightened buyer demand and with no end in sight until September at the earliest, we can expect house prices to continue climbing,” he said.

Iain McKenzie, CEO of The Guild of Property Professionals, said: “What goes up must come down, says the old adage, but nobody seems to have told the property market.

“The stamp duty holiday kickstarted this property boom in July, but the explosion in prices has been fuelled by a whole nation reassessing where they want to live, and this movement shows no sign of slowing.

“The combination of high demand and low supply could create the conditions for a housing super-boom the likes of which we haven’t seen since the early 2000s.

“Our members have recently seen a tentative improvement to the number of listings coming to market, but we are a long way from it making a significant impact on property prices.”

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