Latest figures from Nationwide have revealed that there has been an “unexpectedly rapid” recovery in house prices following a recent dip.
Reported in the mortgage lender’s latest House Price Index, the average home in the UK now costs £220,936 – which is up 1.7 per cent compared to June 2020 (£216,403) and 1.5 per cent compared to July 2019 (£217,663). *
Nationwide has noted that this rebound is good news for the housing market, as buyers are once again becoming active following the Covid-19 lockdown.
House prices on the rise
The monthly and annual increases in house prices highlight a recovery in the property market as the UK moves out of its lockdown restrictions. Nationwide’s July report suggests that a change in behaviour from buyers and the demand for moving home has enabled the market to make a rebound after a slight fall during the initial stages of the pandemic.
Commenting on the latest figures, Robert Gardner, Nationwide's chief economist, said: “The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions. The rebound in activity reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing.
“Behavioural shifts may be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown. Our own research, conducted in May, indicated that around 15 per cent of people surveyed were considering moving as a result of life in lockdown.”
The stamp duty holiday to create an active market
According to Nationwide, a contributing factor to this trend continuing in the near future is the recently announced stamp duty holiday, which came into action on July 8. The chancellor Rishi Sunak has increased the threshold on property prices which require stamp duty rates to be paid to £500,000, meaning buyers can temporarily benefit from not having pay to this additional cost.
In Scotland, increasing the threshold to £250,000 for when LBTT is to be paid is aimed at being a catalyst to make buyers more active and means 80 per cent of buyers won’t have to pay tax rates on purchasing a new home.
Robert Gardner commented on the rate reductions: ““These (increasing) trends look set to continue in the near term, further boosted by the recently announced stamp duty holiday, which will serve to bring some activity forward.”