House asking prices have hit record levels across every region of Great Britain, according to latest figures, although some experts have questioned whether the pandemic boom is finally starting to wane.
The average price of properties coming to market rose by 0.8% month on month in June to a third consecutive record of £336,073, according to data from Rightmove, a property listings website.
It was the largest June increase in Rightmove’s index since 2015. However, the huge increase in sales compared with the pre-pandemic period appeared to wane somewhat. The number of sales agreed in May was 17% ahead of the same point in 2019, after sales in April were up by 45% compared with two years earlier.
Economists and housing insiders have been surprised – and in some cases taken aback – by the strength of the UK house price boom during the Covid crisis. Andy Haldane, the Bank of England’s chief economist, said this month that Britain’s housing market was “on fire” because of the government’s stamp duty tax breaks as well as increased demand from richer households with more savings after lockdowns. There has also been demand for more space since the coronavirus struck, raising prices in some areas still further.
Tim Bannister, Rightmove’s director of property data, said there were “early signs of a slowing in the frenetic pace” of house sales – although this was partly down to high prices coupled with the number of houses on sale hitting an all-time low.
“Record low interest rates and stamp duty tax reliefs have helped many to afford higher prices, satisfying their pent-up desires for a new home fit for a new era,” Bannister said. “Some of that demand has now been met, and the phasing out of stamp duty reliefs has also taken away some of the urgency to move, though our high traffic and search data indicate that there is still strong buyer demand.”
The Rightmove data is based on asking prices of houses on its platform. Separate data from the Office for National Statistics based on completed purchases shows lower average house prices but gives a similar picture of a hot market.
The ONS data showed house prices peaking at £256,000 in March 2021 but with strong price increases across the four nations of the UK. Its measure of the average UK house price dipped to £251,000 in April but that was still £20,000 higher than in April 2020.
The outlook for house prices has been complicated by the extension to the end of the stamp duty holiday. The holiday, brought in by the chancellor, Rishi Sunak, when it appeared that the pandemic might cause prices to crash, has been criticised for fuelling the house price boom as buyers have rushed purchases through to get in before the deadline.
The threshold at which stamp duty begins in England and Northern Ireland will be reduced from £500,000 to £250,000 on 1 July. Then in September it will fall again to the pre-pandemic level of £125,000.
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, a consultancy, expects house prices to hit a new peak in September but then to fall sharply in October and finish the year up by only 1% year over year.
“Prices would fall by 1% in October, if the effective tax hike was fully capitalised into prices,” Tombs said. “But a bigger fall seems plausible, as the stamp duty land tax holiday has concentrated demand that would have materialised over a longer period.”