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House prices surge in Scotland and the north of England as London lags

·3-min read
In London, prices increased by 5.2% in the year to May 2021. Photo: Getty Images
In London, prices increased by 5.2% in the year to May 2021. Photo: Getty Images

UK house prices increased 10% overall in the year to May 2021. Scotland and the north of England saw a significant surge, while London had the lowest annual growth.

The HM Land Registry said house prices were up from 9.6% in April 2021, and the average price of a property in May was £254,624 ($352,623).

Average house prices increased by 0.9% between April and May 2021, compared with an increase of 0.5% during the same period a year earlier.

The largest annual house price growth in the year to May 2021 was recorded in Wales, where prices increased by 13.3%. Scotland saw prices increase by 12.1% while England’s were up by 9.7% in the year to May 2021.

Growth was strongest in the north west of England, where prices increased by 15.2% in the year to May 2021.

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

The lowest annual growth was in London, where prices increased by 5.2% in the year to May 2021.

"While London continues to trail the rest of the market … we’re beginning to see the cogs start to turn, driven by a return to the workplace and preemptive demand from foreign buyers in anticipation of a move later in the year," said Marc von Grundherr, director of estate agent Benham and Reeves.

"As a result, the London property market will continue to build momentum long after the carrot of a stamp duty reprieve has been removed.”

Read more: Shortage of UK houses for sale drives up prices

The threshold for stamp duty, a tax on property transactions in England and Northern Ireland, was at £500,000 until 30 June for residential purchases.

The "holiday" on the duty was meant to boost the property market by helping buyers whose finances were affected by the pandemic. It was initially meant to end in March but was extended to June by chancellor Rishi Sunak.

"It’s abundantly clear that the market came to a shuddering halt due to the original stamp duty deadline and while we may now see transactions and house price growth yo-yo due to the double-pronged extension, there’s no hiding the fact that a correction is on its way," said Matthew Cooper, founder of Yes Homebuyers.

He added that house price affordability has spiralled and is now even further out of reach for the average homebuyer.

"Those lucky enough to secure a purchase remain bogged down in lengthy market delays and rather than build more homes, the government continues to feed the furnace to keep property values artificially inflated."

Last week the Royal Institution of Chartered Surveyors said the housing market saw an increase in demand but supply is “continuing to falter”, leading to a hike in prices.

Surveyors across the UK reported a decrease in new property listings, with the net balance standing at -34% in June, down from -24% in May.

Watch: Why are house prices rising during a recession?