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House prices see fastest growth in seven years and ‘likely to keep rising’

Since May 2020 nearly £22,000 has been added to the average house price

House prices in the UK are expected to continue rising despite reaching record levels in May, according to Halifax.

Halifax, one of the UK’s biggest mortgage lenders, revealed that the price of a home jumped by 1.3% in May, brining the average selling price to a record £261,743. Many are making efforts to secure deals as the UK’s stamp duty holiday begins to draw to a close.

Since May 2020, nearly £22,000 had been added to the average house price, as the UK saw a gradual easing of its lockdown restrictions.

At a yearly rise of 9.5%, it is the fastest rate of growth in seven years.

Halifax’s findings echo Nationwide’s report from last week which suggested that UK house prices rose by an annual 10.9% over the same time period.

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The Halifax managing director, Russell Galley, said: “Heading into the traditionally busy summer period, market activity continues to be boosted by the government’s stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline, after which there will be a phased return to full rates.”

In addition to a move int the average price of a home, there has been a shift in the type of homes people are looking to move into during the pandemic. The working from home surge has created interest in bigger homes outside of city centres and with gardens.

“These trends, coupled with growing confidence in a more rapid recovery in economic activity if restrictions continue to be eased, are likely to support house prices for some time to come, particularly given the continued shortage of properties for sale,” Galley said.

Sam Mitchell, CEO of online estate agent Strike, said: “Contrary to the British weather, the UK property market was red-hot in May and house prices showed no signs of cooling.

“The fast approaching stamp duty holiday deadline has helped turn the market into a frenzy, but there are other factors at play here. A sense of normality is returning as restrictions lift and the vaccination roll out progresses, while we’ve also seen a major uplift in the 95% mortgage offering which has helped more first-time buyers come to the market.

“Many will be questioning if this level of demand will last once the stamp duty holiday begins to taper off, but let’s not forget that the UK is still faced with a major supply and demand imbalance issue. A lack of new stock, particularly houses with outside space and in rural locations, will continue to push prices up by being outweighed by demand. Plus, the Government may well have something else up its sleeve to support the market once the stamp duty holiday ends.”

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