Two homes in one

Typical property value hits a new record high, writes Vicky Shaw

The average house price surged by nearly £16,000 over the year to April to hit a new record high, according to an index.

Across the UK, the typical property value hit a peak of £238,831 in April, Nationwide Building Society said.

The average price had increased by £15,916 over the previous 12 months.

Nationwide said annual house price growth rebounded to 7.1% in April, from 5.7% in March.

House prices jumped by 2.1% month on month, marking the biggest monthly increase since 2004.

The report said predicts that annual house price growth will reach double digits by this summer, if prices hold steady over the next couple of months.

Robert Gardner, Na ti on wide’ s chief economist, said: “Annual house price growth accelerated to 7.1% in April, only slightly below the peak of 7.3% recorded in December and up from 5.7% in March.

“In month-on-month terms, house prices rose by 2.1% in April, after taking account of seasonal effects, the biggest month rise since February 2004.

“Just as expectations of the end of the stamp duty holiday led to a slowdown in house price growth in March, so the extension of the stamp duty holiday in the Budget prompted a reacceleration in April.

“However, our research suggests that, while the stamp duty holiday is impacting the timing of housing transactions, for most people it is not the key motivating factor prompting them to move in the first place.

“For example, amongst homeowners surveyed at the end of April that were either moving home or considering a move, three-quarters said this would have been the case even if the stamp duty holiday had not been extended.”

Mr Gardner said activity is likely to remain “fairly buoyant” over the next six months as a result of the stamp duty extension in England and Northern Ireland and additional support for the labour market included in the Budget.

Low borrowing costs and many people remaining motivated to move as a result of changing housing preferences during the pandemic are also expected to support housing market activity.

Mr Gardner added: “With the stock of homes on the market relatively constrained, there is scope for annual house price growth to accelerate further in the coming months, especially given the low base for comparison in early summer last year.

“Indeed, if house prices remain flat in month-on-month terms over the next two months, the annual rate of growth will reach double digits in June.

“Further ahead, the outlook for the market is far more uncertain. If unemployment rises sharply towards the end of the year as most analysts expect, there is scope for activity to slow, perhaps sharply.

“However, shifts in housing preferences may continue to support activity, even if labour market conditions weaken.”

Mr Gardner said that bearing in mind only 5% of the housing stock typically changes hands in a given year, it only requires a relatively small proportion of people to follow the desire to move to have a material impact .”