House prices surge to giddy highs, but no sign of altitude sickness yet (ONS)
Sarah Coles, personal finance analyst at Hargreaves Lansdown, comments on the publication of the ONS house price index and inflationary index for June 2021, showing house prices surging high.
Key points from statistics:
- Average house prices were up 13.2% in a year to June, the highest annual growth rate in 17 years, as buyers rushed for the stamp duty holiday deadline.
- The average house price hit a record high of £265,668 – up £31,000 in a year.
- House prices in London were still the highest in the UK, at a record high of£510,000.
- Prices in the North West saw the highest annual growth at 18.6%, while London saw the lowest annual growth of 6.3%. This was the seventh consecutive month that London was bottom of the pile.
- Houses maintained their price rise premium over flats, with detached properties up 15.6% and flats 8.4%.
- New builds were up 14.4%, and previously-owned properties 9.1%.
Sarah Coles said:
“House prices surged to giddy new highs in June, at a rate that threatens a nosebleed. But while these kinds of rises always raise the fear of imminent collapse, there’s every sign we could be heading for a soft landing when the stamp duty holiday finally ends in September.
“The 4.5% jump in prices between May and June was due largely to the stamp duty holiday tapering at the end of June, which meant far smaller savings for more expensive property purchases that completed after the deadline. Sales hit record highs in June, as buyers rushed to complete, and demand far outstripped supply, pushing prices into the stratosphere.
“There are already signs that this boom is slowing. RICS says new buyer demand fell after the end of the stamp duty holiday, while lenders reported small falls in mortgage approvals. But neither of these changes have been particularly striking. Record low mortgage rates continue to support healthy demand, while a shortage of properties for sale will keep prices up.
“It means that instead of facing a precipitous plunge from these new highs, we’re more likely to see price rises flatten out, and sales slow as the stamp duty holiday finally ends in September.
“The property boom has been brilliant news for homeowners with no plans to move anywhere larger or more expensive. The equity in their home has increased dramatically, which means they may be able to remortgage to free up some cash or for a cheaper deal. Mortgage rates are currently at record lows, so those with more equity could get a rate south of 1% at the moment. For those planning to downsize, rises will put more money in their pocket, which could be a boon for thousands of retirees.
“However, people hoping to buy for the first time or move up the property ladder have had a difficult 12 months, and will have been thwarted by price rises in June too. The average house price has soared £31,000 in year, which means many have to stretch their finances worryingly thin to make a move. For them, news of record highs will be another blow for their house buying dreams.”
Kindly shared by Hargreaves Lansdown
Main photo courtesy of Pixabay
