House prices rose an average of £ 20,000 over the past year, according to official data, as separate data showed house sales doubled year over year in March.
House price inflation reached 8.6 percent from year to February, marking the highest annual growth rate since 2014, announced the National Statistics Office, based on its paid index based on the land register price.
As buyers try to take advantage of stamp duty, the average home price has risen above the £ 250,000 mark, meaning values have increased by £ 20,000 in one year. This outweighs the maximum saving of £ 15,000 stamp duty also only available on homes costing £ 500,000 or more.
The numbers have heightened concerns about rapidly rising property prices, which are crowding out buyers as property affordability continues to stretch.
On the rise: the typical UK property price has risen by £ 20,000 in a year
After rising steadily since the coronavirus restrictions were eased in July 2020, house prices have remained on the order of £ 250,000 since December 2020.
The North West was the English region with the highest annual growth in average house prices of 11.9 percent. The typical house there is now £ 184,000.
London had the lowest growth at 4.6 percent, but house prices remain the highest in the UK, averaging £ 496,000.
The North East has the cheapest houses in England averaging £ 138,000.
Average house prices in England rose 8.7 percent to £ 268,000. In Wales they grew by 8.4 percent to £ 180,000, in Scotland by 8 percent to £ 162,000 and in Northern Ireland by 5.3 percent to £ 148,000.
House prices have risen every month since July 2020 when coronavirus restrictions eased, although they stagnated between January and February 2021, despite the fact that data is from before the stamp duty renewal was announced.
House prices have risen dramatically since coronavirus restrictions eased in the summer of 2020
The increase is due to people’s changing housing preferences during the pandemic as well as the stamp duty holidays that have been in force since July 2020.
This saves buyers up to £ 15,000 in taxes by removing stamp duty on the portion of a property sale under £ 500,000.
This will continue in its current form through June until the zero rate band is lowered to £ 250,000 and ends in October.
In February 2021, when the latest ONS statistics were collected, many shoppers would have been rushing to finalize their transactions before the original March 31 stamp duty vacation end date.
The extension was announced in the budget at the beginning of March.
Capital Values: London had the lowest house price growth in any UK region over the past year but still has the highest average price at £ 496,000
Buyers sought more space during the pandemic, which was reflected in the fact that the value of freestanding properties increased 9.1 percent in February 2021, while apartments and maisonettes increased 6.7 percent over the same period.
Real estate market experts said the pandemic, stamp duty vacation and the start of the traditional summer home sales season together would have boosted demand for bumpers – but the market is likely to cool off by fall.
Nicky Stevenson, General Manager of the national real estate group Fine & Country, said, “Trust is king and there are many of them.
“It would have stayed that way even if the vacation had ended with the stamp duty. Now that it isn’t, that’s just more fuel for the fire, but its effects have been overrated all along.
“When it finally ends at the end of September, the market should cool down anyway after another peak summer.”
High demand: There are currently more interested buyers than properties available
Nick Leeming, Chairman of Jackson-Stops added, “We haven’t seen this growth in over six years and there is still no sign of it slowing.
“Activities continue to be driven by buyers looking for more space and access to nature, whether it’s locations with a closer connection to the countryside or properties with larger private gardens.
‘There is still a very large gap between the strong demand from buyers and the availability of new properties.
‘We will see a step towards a greater balance as more vendors try to capitalize on the inequality between supply and demand as well as the golden opportunity to take advantage of low interest rates and stamp duty leave for their further purchases.
“Savvy salespeople should act now as these market conditions create opportunities for quick sales and extremely strong prices.”
Others, however, were more optimistic about house prices over the long term.
Jeremy Leaf, North London real estate agent and former chairman of RICS, said: “Despite the sharp rise in property prices, we are confident that there is enough demand to ensure there is no price correction despite the stamp duty cut on holiday from the end of June.
“Our view will be strengthened by the introduction of the vaccine and the relaxation of lockdown restrictions, which will boost confidence in the economy and alleviate fears of a spike in unemployment when the vacation program ends on September 30th.”
Transaction levels SURGE
HMRC’s March real estate transaction statistics were also released today.
They show that in March 190,980 properties were sold seasonally adjusted.
This was twice as much as last year – despite the UK being locked for the last eight days of the month.
The numbers also increased by a third compared to February 2021. It was also a record for March since 2005 sales were measured this way.
Many of these transactions would have started while buyers were still pushing to close them by March 31st to take advantage of the tax savings.
The number of real estate transactions doubled between March 2020 and March 2021
Sarah Coles, personal financial analyst at Hargreaves Lansdown, said tax savings had a far greater psychological impact than financial ones given the relatively small tax savings.
“It prompts people who had a vague idea that they would eventually move into the future to flesh out their plans and crack them,” she said.
‘We saw twice as many sales as we did in March before when buyers struggled before tax burdens rose again. The Chancellor postponed the deadline shortly before it arrived, but until then the buyer and seller were obliged, “she said.
“However, we can expect peak months in April and May as the process has gone like mud and many sales have slipped past the original deadline.”
However, she added that some heat could come from the market in June.
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