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'Berserk' UK house prices rise at fastest rate since 2004

FILE PHOTO: A row of houses are seen in London

LONDON (Reuters) -British house prices rose in June at the fastest annual rate since 2004 as the market surged ahead of a phasing out of a tax break on property purchases, official data showed on Wednesday.

House prices were 13.2% higher than in June 2020, the Office for National Statistics said, following a 9.8% annual increase in May.

Finance minister Rishi Sunak cut stamp duty, a tax on house purchases, in July 2020. But from last month it started to return to its pre-pandemic level.

The tax cut aimed to reverse a slump in property sales at the start of the pandemic, and helped fuel a surge in property prices and some new construction. Many households were already seeking more spacious housing suited to working from home.

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"Prices went berserk as the stamp duty taper closed in," said Lucy Pendleton from London-based estate agent James Pendleton.

More timely gauges of the housing market suggest the market has cooled a little since June - but only a little.

At the top end of the scale, house prices in the north west of England rose in June by 18.6% in annual terms, the ONS said. London stood at the bottom end but house prices there were still up 6.3%.

(Reporting by Andy Bruce; editing by James Davey)