Yahoo Finance Summer property boom pushes house prices to record high
House prices jumped by 2.5pc in the 12 months to the end of August as the post-lockdown property boom pushed up the cost of property, official figures showed.
The August figure was a large increase from the 2.1pc rise witnessed in July, the Office for National Statistics said, as deals that were held back during lockdown completed and bumped up property prices.
The average house price in Britain reached a new high in the summer month, hitting £239,000. This was £6,000 higher than August 2019.
Prices jumped by 0.5pc during the month, on a seasonally adjusted basis. This was a shift from July when monthly prices fell by 0.5pc.
The outlook for autumn prices is strong with the number of transactions for residential properties rising 21.3pc during August, according to HM Revenue & Customs' provisional estimate.
As sales take several months to complete, the data does not yet show the impact of the stamp duty holiday that was announced in July. There were 98,010 completed transactions in September, according to HMRC. This was down 0.7pc compared with September 2019 but showed the sector had fully recovered from the spring market shutdown.
Lucian Cook, of Savills estate agents, said: “Concerns over the underlying economic backdrop have essentially been trumped by an increased desire to move among people who have reassessed their housing needs given the experience of lockdown.”
The stamp duty holiday has also fired up existing homeowners to move up the property ladder into bigger homes, said Mr Cook.
However, while demand is high the market’s momentum could become constrained by its own success.
The capacity of solicitors and mortgage providers to process sales will dictate how long the increase in prices and transaction can continue, Mr Cook said. Wait times for mortgage approvals, for example, have doubled due to high demand fueled by the tax cut and the post-lockdown backlog.
The lag time with ONS and HMRC data also means the numbers do not reflect the impact of rising unemployment and increased coronavirus restrictions will have on the housing market and property prices.
Jamie Durham, of accounting firm PwC, said the uncertainty arising from the second wave would cause people to delay "major financial decisions such as moving home" and lead to weaker house prices in the coming months.
Values in the English market, which was the first to reopen in the United Kingdom on May 13, were up 2.8pc in the 12 months, hitting £256,000, according to ONS data.
The East Midlands saw the biggest price rises of any region in England, with 3.6pc annual increase. The North East saw the lowest rate of growth, at 0.2pc.
In Wales and Northern Ireland, the respective price climbs were 2.7pc and 3pc. The average house prices in August were £173,000 and £141,000.
Scotland recorded much less growth, at just 0.6pc. This can partly be attributed to the later opening of its housing market on June 29. The average house price was £155,000.
