Average UK house price reached new high of £239,000 in August – ONS

House prices have been rising despite the increasing unemployment due to Covid-19.

THE average UK house price hit a new peak of £239,000 in August after increasing by 2.5% annually, according to official figures.

House prices across the UK were £6,000 higher typically than in August 2019.

One economist commenting on the figures said most of the price gains seen since the market reopened are likely to be wiped out in the 12 months ahead as job losses and tougher mortgage lending conditions bite.

Average property values increased annually by 2.8% in England to reach £256,000, by 2.7% in Wales to £173,000, by 0.6% in Scotland to £155,000 and by 3% in Northern Ireland to £141,000.

Within England, the East Midlands had the highest annual growth in average house prices (3.6%), while the North East had the lowest (0.2%).

The Office for National Statistics (ONS), which released the figures jointly with the Land Registry, said the price data in August will mainly reflect sales agreed before a temporary stamp duty cut was introduced.

The stamp duty threshold in England and Northern Ireland was increased to £500,000 in July, but house purchases can take six to eight weeks to complete, and the index is based on completed sales.

The figures were released as HM Revenue and Customs (HMRC) data showed 98,010 home sales took place across the UK in September – a total which is broadly in line with the same month a year earlier.

House sales in September jumped by more than a fifth (21.3%) compared with the previous month.

HMRC said the month-on-month jump is likely due to the continued release of pent-up demand within the property market since the start of the lockdown in March, and the early impacts from the temporarily increased “nil rate” band of stamp duty.

The housing market was effectively put on hold earlier this year due to coronavirus-related measures and transactions fell sharply in April before increasing once more.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The current surge in prices has unstable foundations.

“It partly reflects well-off buyers seeking to buy bigger homes in response to the pandemic, using some of the savings from commuting less and consuming fewer services. This wave of demand likely will be sated soon.

“Meanwhile, demand from first-time buyers likely will be hobbled by declining employment, stagnant wages and the recent jump in mortgage rates.”

He continued: “Admittedly, renewed falls in house prices next year still could be avoided, if the Government extends the stamp duty holiday beyond the end of March, or introduces a new mortgage guarantee scheme to help first-time buyers purchase homes with high LTV (loan-to-value) loans.

“But as things stand, it remains likely that most of the increase in prices since the housing market reopened in May will be reversed over the course of the next 12 months.”

Jamie Durham, an economist at PwC said fresh lockdown restrictions may introduce uncertainty both locally and nationally.

He said: “Uncertainty may cause people to delay major financial decisions such as moving home and lead to weaker house price growth over the coming months.

“Assuming there is a relatively limited second peak in Covid-19 cases, with no nationwide lockdown, house prices could grow nationally by around 1% in 2021. If further measures are introduced to control the spread of the virus, house prices could fall in 2021.”

Sam Mitchell, CEO of online estate agent Strike, said: “At the moment, lenders, surveyors and lawyers are all busier than ever and so it may be taking a little longer than usual.

“That’s why it’s so important that people don’t wait around to take advantage of the stamp duty holiday, even if there is still five months to go until the deadline. Starting the process now should allow plenty of time to complete and exchange ahead of the March 31.”

Lucian Cook, Savills head of residential research, said: “The allure of a stamp duty holiday has been a further spur to activity which is primarily being driven by those who have both accumulated a sufficient chunk of equity in their current home and have enough security in their household finances to allow them to trade up the housing ladder.

“The number of deals that have been agreed in recently suggest that these figures will rise further in coming months. By how much really depends on the capacity of solicitors and mortgage providers to process the pipeline of agreed sales. That will limit the number of sales able to be completed by Christmas and, unless something changes, the stamp duty deadline at the end of March.”

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