Average property prices across Britain are now 30 per cent higher than they were at the peak of the market in 2007, before the global financial crash.
Buyers are paying an average of £230,700 for a home, which is the highest on record, according to property portal Zoopla’s latest house price index.
House prices grew by 5.4 per cent in the year to June, but experts at Zoopla said they could start falling as the year draws to an end and the stamp duty holiday and furlough scheme are scrapped.
Price shifts: Average property prices across Britain are now 30% higher than they were at the peak of the market in 2007, according to data from Zoopla
While the stamp duty holiday and cheap mortgage deals have given the property market a boost, a severe shortage in stock has also been pushing up prices.
The number of properties up for sale was around a quarter lower in the first six months of this year than it was at the same point a year ago, Zoopla said.
The stock shortage problem has been exacerbated by a rise in the number of first-time buyers coming to the market, who, of course, have no property to sell.
Getting more space remains a big draw for many prospective buyers, with demand for houses twice as high as the 2017-19 average, while the popularity of flats has waned.
Northern Ireland and Wales saw the biggest spike in property prices in the past year, with rises of 8.6 per cent and 8.4 per cent respectively.
For Wales, this represents the highest rate of annual growth for 16 years, with many areas becoming increasingly popular with relocators and second home owners.
Demand for houses has pushed their price tags up, especially in Wales which proved popular with relocators and second home owners
Stock matters: The number of homes being put up for sale has failed to keep up with demand
This was despite the fact that the Welsh land transaction tax holiday, its equivalent of the stamp duty break, did not apply to second home or buy-to-let purchases.
In Wales and England, buyers could save up to £15,000 in tax on house purchases until 30 June. In England, they can still save up to £2,500 until 30 September.
At a regional level, house price growth was at its highest in the North West (+7.3 per cent) and Yorkshire & the Humber (+6.8 per cent), while London trailed behind with annual house price growth of +2.3 per cent.
Demand in London is polarised between inner and outer, with demand in outer London running 86 per cent ahead of the 2017-19 average.
‘This is explained in part by the available housing stock – with larger volumes of houses and properties with outside space’, Zoopla said.
In contrast, demand in inner London is running just 2 per cent above the ‘normal’ market average.
This is also reflected in the pricing of properties, with London flats, predominantly clustered towards the centre, dipping by 0.5 per cent in the year to June. In contrast, houses have registered growth of 5.6 per cent in the past year.
Looking at other major cities, Liverpool has performed well as house prices grew by 8.9 per cent in the past year.
Rochdale, Bolton and Hastings all saw property prices increase over 9 per cent during the period, while Belfast, Manchester and Sheffield saw prices rise more than 7 per cent.
Sales levels up and down the country are running about 22 per cent higher than they were last year, but buyer demand slipped 9 per cent in the first half of July after the initial phase of the stamp duty holiday ended.
However, transaction volumes are still around 80 per cent higher than they would normally be at this time of year.
Your area: A map showing how house prices have been changing up and down Britain
Grainne Gilmore, head of research at Zoopla, said: ‘Demand is moderating from record high levels earlier this year, but remains significantly up from typical levels, signalling that above average activity levels will continue in the coming months.
‘Demand for houses is still outstripping demand for flats. To a certain extent this trend will have been augmented by the stamp duty holiday, with bigger savings on offer for larger properties – typically houses.
‘But underneath this, there is a continued drumbeat of demand for more space among buyers, both inside and outside, funnelling demand towards houses, resulting in stronger price growth for these properties.’
She added: ‘Overall buyer demand coupled with constrained supply signal that price growth will continue to rise in the coming months, peaking at around 6 per cent, before falling back to between 4 per cent to 5 per cent by the end of 2021.’
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.