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UK house prices hit a new all-time high in August after the biggest monthly increase since 2004, according to new figures from Nationwide.
The average home sold for £ 224,123 ($ 299.82) in August, up 2% from £ 220,935 in July.
It provides the latest sign of the mini-boom in the British property market in recent months, with suppressed demand after closing and a temporary stamp tax holiday driving sales and price growth.
Data from the Construction Society, one of Britain’s largest mortgage lenders, showed a 3.7% year-on-year increase. Analysts had expected just a 0.5% increase in July and a 2% annual increase.
The market has now erased all the losses seen in May and June. Robert Gardner, chief economist at Nationwide, said it reflected the “unexpectedly rapid” recovery in activity since restrictions were eased.
Gardner highlighted not only pent-up demand, but also people who reassess their “housing needs and preferences” as a result of living under lock and key. “Social distancing does not seem to have as much chilling effect as we might have feared, at least at this point,” he added.
It comes a day after official figures showed that loans for new mortgages soared 66.2% between June and July. Lenders approved 66,300 mortgages for the purchase of residential property in July, according to a comprehensive Bank of England (BoE) survey released Tuesday.
Approvals were just 10% below February levels and more than seven times higher than the 9,300 mortgages signed in May in the wake of the national lockdown and lenders who prioritized efforts to help existing mortgage customers.
UK Chancellor Rishi Sunak announced a temporary stamp tax holiday on purchases of less than £ 500,000 ($ 671,000) in England and Northern Ireland in early July. The threshold had previously been £ 125,000, albeit with higher thresholds for first-time buyers.
The finance minister said at the time that the measures would “catalyze the housing market and increase confidence” as the government struggles to pull the country out of a deep recession.
Hugh Wade-Jones, managing director of mortgage brokers Enness Global Mortgages, said this week that the tax cuts had “sped up” the market.
Rentals have lagged behind the sales boom, but separate figures from real estate firm Knight Frank on Tuesday also showed that rental visits had reached a ten-year high in London and Home counties by the end of August.
The company said students had fueled increased demand, as uncertainty about starting college in the middle of a pandemic and the controversial recent release of test results delayed accommodation decisions.
The rebound in the residential property sector comes despite the dire state of the overall British economy and a wave of job losses. Crisis measures by the government and central bank, including low interest rates, mortgage repayment holidays and the licensing scheme, are considered to have strengthened the market.
Gardner said the stamp duty cuts would boost demand for “short-term” purchases by advancing some transactions, but suggested the recovery could eventually fade.
“Most forecasters expect labor market conditions to weaken significantly in the coming quarters as a result of the aftermath of the pandemic and as government support schemes decline. If this happens, real estate activity is likely to slow down. once again in the next few quarters. “
