UK house prices jumped by almost £5,000 in the month of August as the property market continued to boom following the partial end of the stamp duty holiday in England and Northern Ireland.
The rise is reported by the Nationwide Building Society, which said the cost of the average home had risen by £4,628 to £248,857, which is a monthly rise of 2.1% - the second biggest in 15 years.
There had been an expectation that house price inflation would settle after the threshold for paying stamp duty came down from £500,000 to £250,000 in July. However, year-on-year property inflation was up to 11% in August, up from 10.5% the month previously.
Nationwide said the strength of the property market in August was due to a shortage of properties for sale and buyers of homes worth below £250,000 bidding to complete purchases prior to the stamp duty threshold reverting to its pre-pandemic rate of £125,000 in October.
The record low interest rates, a demand for more space caused by the pandemic, and the government incentives, have seen the average UK house price rise by 13% since the start of the crisis 18 months ago.
August’s house price increase comes after a brief contraction of the market in July when house sales fell by two-thirds following the scaling back of tax breaks by the government for new buyers. Nationwide said price growth was down by 0.6% prior to the rebound in August.
Robert Gardner, Nationwide’s chief economist, said: “The bounceback in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market.”
He said the rise may reflect high demand from people buying a property priced from £125,000 to £250,000 hoping to take advantage of the stamp duty relief prior to it coming to an end, as well as a low amount of properties on estate agents’ books.
Nationwide is expecting the trend in increasing property prices to continue in the short-term due to a rebound in consumer confidence together with a shortage in supply of properties.
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