The latest House Price Index released by Rightmove has revealed the average price of a UK home has hit a new high after rising 2.1% in the last month.
According to the report, the national average for a home in the UK stands at £327,797, an increase of £4,000 since October last year. According to Rightmove, the market is selling at its fastest rate since it began keeping records.
The company’s director of property data Tim Bannister said it was a ‘big jump’. He added: “The stars have aligned for this spring price surge, with buyers’ new space requirements being part of the constellation alongside cheap mortgages, stamp duty holiday extensions in England and Wales, government support for 95% mortgages and a shortage of suitable property to buy. There’s also growing optimism due to the vaccination roll-out, which is helping drive the momentum for a fresh start in fresh surroundings.”
Rightmove said that two- and three-bedroom semi-detached houses are being snapped up quickest, with 30% of those that are being marked as sold by agents having been on the market for less than a week. The firm went on to suggest that the surge in activity is now being driven by the mass market where few buyers will be achieving the maximum stamp duty savings. Momentum is being partly driven by the lack of property coming to market over the last few months, it said, which has reduced available stock levels as we move into the spring home-moving season.
Industry reaction came thick and fast. Wayhome’s CEO Nigel Purves said the country needed a more-sustainable housing system. He added: “More than a quarter of the UK’s renters and homeowners have found that their property needs have changed since the outbreak of Covid-19, with demand for space skyrocketing, both indoors and out. It’s unacceptable that the UK’s housing market forces people into the wrong properties in the wrong areas for their needs, often based on unfair mortgage lending criteria. If we want a more sustainable housing system, we need to promote more innovative routes to home ownership, to ensure that both buyers and sellers get the outcome they deserve.”
Others took issue with the rise in house prices. Canopy CEO Tahir Farooqui said: “Another rise in house prices will be a kick in the teeth to hopeful first-time buyers, further widening the gap between them and their first home. The stamp duty holiday has no doubt stimulated the surge of activity in the market, but we do need to question whether it has helped the right people. For those looking to enter the market a stamp duty holiday doesn’t take away from the fact that house prices are just too high and securing an affordable mortgage is near impossible.”
MetLife head of individual protection Rich Horner posited that the stamp duty holiday being made permanent may be a wise move by the government. He added: “This reinvigoration of the market in the past nine months has led to calls for the stamp duty cut to become a permanent fixture. But, without a clear pipeline of housebuilding activity the market could become over-stimulated. If house prices continue to rise, first-time buyers may find themselves squeezed out at the bottom of the market, despite incentives such as the help to buy scheme and 95% government-backed mortgages becoming available.”
Others chose to look ahead. GoodMove’s director Ross Counsell said: “Looking ahead, we predict the property market will continue to thrive in the first half of 2021; however, following the end of the Stamp Duty Holiday the state of the property market remains uncertain. Therefore, we expect that house prices and demand will ease in the last 6 months of 2021 resulting in a slower housing market.”
This post has originally been featured in Property Wire.