Yearly rate of house price growth now at 13.4%
UK house prices are rising at the fastest yearly rate since 2004, according to figures released by Nationwide.
Month-on-month, the average price of a UK home increased in June, up by 0.7% compared to May. This means that the yearly rate of growth is now at 13.4%, the highest rate of annual growth in nearly 17 years.
Nationwide chief economist Robert Gardner said prices were closing in on a record high relative to average incomes, which he said makes it more difficult for first-time buyers.
“Another month, another rise in house prices. Not a surprise as many home buyers rush to complete before the end of the stamp duty holiday,” said Danni Hewson, AJ Bell financial analyst commenting on Nationwide’s House Price Index.
“There are many factors at play here. Cheap interest rates and the availability of low deposit deals have undoubtedly fuelled price hikes despite the country being slap bang in the middle of a pandemic which has impacted people’s economic health.”
“But that pandemic has also spurred the market on, changing our preferences. What was top of people’s wish list two years ago is a distant memory with the potential to spin out working from home indefinitely, or at least on a part time basis, expanding the geographical map for many and adding home office to the list of demands,” Hewson said.
Hewson does not feel the shift is likely to revert back and expects the market to remain “toasty” over the coming months. “The X factor will be unemployment. How many people will still be in a job once the furlough scheme ends? How many mortgage holidays will result in quick sales? There’s no getting away from the fact that the next few months will be difficult for many people once support is withdrawn,” Hewson said.
Last summer, Rishi Sunak cut the stamp duty tax on property purchases to reverse a slowdown in property sales at the beginning of the pandemic. In March, Sunak extended the tax cut to the end of June.