Annual UK house prices jumped 10.9% in May, with buyers in a ‘race for space’

A stamp duty holiday has boosted the housing market

(PA)

Annual average UK house price growth jumped 10.9% last month, marking the highest level in nearly seven years.

The gain adds to the strong trends seen recently, as buyers continue to welcome a stamp duty holiday and the pandemic prompts numerous people to reassess housing needs.

Nationwide said prices stood at £242,832 last month. That was up 10.9% from the same month last year, or up £23,930 over the last 12 months. The figure was 1.8% higher in month on month terms.

Robert Gardner, Nationwide's chief economist, said: “The market has seen a complete turnaround over the past twelve months. A year ago, activity collapsed in the wake of the first lockdown with housing transactions falling to a record low of 42,000 in April 2020. But activity surged towards the end of last year and into 2021.”

The sector was helped by measures in the March Budget, from an extension of the stamp duty holiday deadline, to a new mortgage guarantee scheme to help people with a 5% deposit get on the property ladder.

The mortgage lender said the ‘race for space’ continues, and said of those moving or considering a move, around a third were looking to move to a different area, while nearly 30% were doing so to access a garden or outdoor space more easily.

Nationwide’s Gardner added that the market is also helped by low borrowing costs and improving credit availability.

He said: “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, though even this could potentially be offset by ongoing shifts in housing preferences, if current trends are maintained.”

Anthony Codling at property analysis firm Twindig said: “Nationwide believes that the stamp duty holiday, working from home and Covid-19 has led to a 'race for space' as households seek bigger homes and more outside space in less urban areas. However, this space race will leave many aspiring buyers left behind and grounded as house prices become too high in the sky to reach.”

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