House prices bounce back as lockdown lull vanishes

PROPERTY prices have surged in every region as the market stages a sweeping recovery, official figures revealed yesterday.

Larger homes saw the biggest price rise while flats fell in value after lockdown fuelled demand for more space.

The price of the average home rose 2.5 per cent, or £6,000, in the year to August, hitting a record high of £239,196, Office for National Statistics (ONS) data showed.

As separate figures showed the stamp duty holiday is fuelling a sales boom, Chancellor Rishi Sunak argued the resurgence of the market has helped support hundreds of thousands of jobs.

The ONS revealed the property market has bounced back for four consecutive months after briefly going into reverse when lockdown was introduced in March.

The August figures do not take into account the full impact of the Chancellor’s stamp duty holiday.

The fastest growth was recorded in the East Midlands, where the average house price jumped 3.6 per cent.

They also rose 3.5 per cent in the North West and London, and 2.9 per cent in the South East.

Reports that the lockdown sparked a surge in demand for bigger homes and gardens were borne out by the official figures, which are taken from the Land Registry. Across England semi-detached homes saw the biggest rise in price of all property types, increasing in value by 4.3 per cent to an average of £244,000.

Detached homes jumped by 3.1 per cent, with terraced houses up 2.4 per cent. In contrast, the average price of flats and maisonettes fell slightly by 0.2 per cent to £224,000.

David Hollingworth, from mortgage broker London and Country, said: ‘Anecdotal evidence is now being backed up by the official figures.

‘The lockdown has changed the way people think about where they live and what they need.

‘Many people are looking for more outdoor space, more room – including office space as working from home increasingly becomes the norm. Where commuting distance was once the key factor that has probably fallen away.’

The property market boom is being fuelled by the stamp duty holiday, which came into effect on July 8 and exempts buyers from the levy on property values up to £500,000.

It means nine out of ten people will pay no stamp duty at all, and delivers an average saving of £4,500. Yesterday Mr Sunak seized on separate figures from HM Revenue and Customs which showed home sales soared by more than 21 per cent last month compared with August.

He said the mini boom is crucial for the wider economy. He said: ‘With a third of Brits planning to spend savings from the tax break on home improvements and renovations, the temporary stamp duty cut is boosting business and protecting jobs.’

The ONS said house prices were rising before the tax break had time to take effect.

Separate reports from Halifax and Nationwide have shown that house prices continued to grow last month, due to a combination of the stamp duty holiday and the release of pent-up demand.

But experts have warned the recovery is likely to be snuffed out in the coming months as Government support for businesses and households is gradually withdrawn.

Economists are braced for a surge in unemployment when the job retention scheme – which is still paying the wages of around two million furloughed workers – closes at the end of this month.

There are also fears that fresh lockdowns will wipe out more businesses and drive up unemployment.

Separate figures published yesterday by UK Finance showed 162,000 homeowners are still on mortgage ‘holidays’ and are not having to make repayments.

This support will be withdrawn at the end of the month, with the interest owed added to the balance of the loan. A temporary ban on repossesions is also being lifted.

‘Looking for more space’