House prices leap 8% in a year to hit record £258k

HOUSE prices surged at their fastest pace in five years to another record high last month as families searched for properties in the countryside.

A typical UK property cost £ 258,204 in April – up by £19,693 compared to a year ago – according to mortgage lender Halifax.

The 8.2 per cent annual rise was the highest rate of yearly growth since 2016. And prices were up 1.4 per cent from March.

Russell Galley, managing director at Halifax, said the boom is being driven by families looking for their ‘dream properties’ following the pandemic.

After a year spent mostly indoors and with home working on the rise, many families are seeking to escape to more spacious houses in the countryside.

The pandemic has also helped households build up bigger savings, giving them more purchasing power, while a new government scheme is guaranteeing 5 per cent mortgages for first time buyers. And property hunters are rushing to take advantage of the stamp duty holiday for homes worth less than £500,000, which ends on June 30.

But Mr Galley said that even as the tax holiday tapers out – falling to below £250,000 until September 30 – prices would still be boosted by low interest rates, a shortage of homes and strong demand in the coming months. He added: ‘Savings built up over the months in lockdown have given some buyers even more cash to invest in their dream properties, while the new mortgage guarantee scheme may have eased deposit constraints for some prospective homebuyers who previously thought their first step on the housing ladder was a few years away.’ But he added Halifax was ‘cautious’ about the market later in the year amid fears the end of the furlough scheme could cause a spike in unemployment.

Yesterday Rob Gill, of mortgage broker Altura, said the current buying frenzy was driven by ‘FOMO’ or ‘fear of missing out’.

‘There is a deep- seated FOMO in the market right now, a fear among buyers that they could “miss out” if they don’t hurry up and buy before prices spiral beyond reach,’ he said. ‘As prices accelerate, it’s certainly tempting to forecast it will all end in tears.

‘ However, history suggests that low interest rates, government support and an improving economy are classic ingredients for house prices to carry on rising rather than crash.’

But Iain Swatton, of mortgage switching platform Dashly, warned: ‘The bubble will almost certainly burst later this year when the stamp duty holiday comes to an end and the full economic impact of Covid and Brexit take effect.’

‘The bubble will burst’