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Houses prices soar 13.4 per cent in June passing 2004 peak

  • 29/06/2021
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Houses prices soar 13.4 per cent in June passing 2004 peak
Houses prices grew by 13.4 per cent in June, the highest level since 2004, but demand is expected to soften as the year progresses.


Pricing is up 0.7 per cent month-on-month, after taking into account seasonal effects, and up from a 10.9 per cent increase in May this year.

Nationwide’s chief economist said that this could be partially due to the weaker June last year due to the first lockdown but said that the market continues to show “significant momentum”.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Interestingly, these comprehensive figures mirror activity on the ground in response to the previous likely withdrawal of the stamp duty concession, followed by the extension to the end of June; in other words, peak activity previously prolonged until the end of the month.”

The report noted that whilst mortgage payments remained relatively low due to high house prices it was more challenging for first-time buyers to raise a deposit.

However, it said that schemes such as Help to Buy and the 95 per cent mortgage scheme as well as improved availability of high deposit mortgages would help first-time buyers overcome deposit hurdles.

MT Finance’s property lender director Tomer Aboody said: “We would argue that the government should be looking at how to release further properties onto the market by reducing or removing stamp duty for downsizers.

“The stamp duty holiday has helped first-time buyers and those moving up the ladder alike; now we need some assistance for those wanting to downsize and move into smaller properties, in turn freeing up larger family homes and helping keep a lid on prices.’

Smartr365’s chief executive officer Conor Murphy said: “Like much of the past year, market activity was dominated in June by the race to complete before the immensely popular stamp duty holiday closes at the end of the month. However, with Help to Buy, First Homes and a £250,000 stamp duty nil-rate band among the forms of government support that will remain on offer after the 30th, this is unlikely to be a cliff-edge moment for the market.”


Regional outlook

All UK regions recorded growth in the second quarter, with Northern Ireland and Wales reporting the largest increases with 14 per cent and 13 per cent respectively.

For Northern Ireland this was largest rise since 2007 and for Wales this was the largest spike since 2005.

Growth in England overall was 9.9 per cent, with Yorkshire and Humberside reporting 13 per cent growth year on year, the strongest in the region since 2005.

London was the weakest region for growth in England, with annual price growth pegged at 7.3 per cent. This compares to 4.8 per cent last quarter.

East and West Midlands annual growth was 12.2 per cent, whilst the North reported year-on-year growth of 11.2 per cent.

The Southwest reached its highest annual house price growth since 2010, with prices up 10.4 per cent, whilst house prices in outer South East grew by 10.9 per cent.

In Scotland growth was more muted, with 7 per cent growth, compared to 6.9 per cent last quarter, making it the weakest performing region in the UK. This was attributed to the stamp duty holiday in Scotland ending in March.


Future outlook

Looking forward the report said that underlying demand would remain solid in the near team, pointing to improved consumer confidence, low borrowing costs as well as a lack of supply in the market forcing up prices.

However, in the longer term it said that underlying demand would soften around the turn of the year due to possibility of rising unemployment as government schemes are rolled back but changing housing preferences as a result of the pandemic could support some activity.

Murphy said that following the lifting of the stamp duty holiday focus could be placed on improving mortgage technology to continue momentum, and that the government should consider how it can continue to level the playing field.

He said: “Many will still be keen to meet the final stamp duty holiday deadline at the end of September, with the final phase of the scheme raising the nil-rate band to double its normal level, meaning the industry must now reflect on how mortgage tech can be used to help as many achieve their homeownership goals as possible. By developing the processes that handle credit checks, DIPs and sourcing, the industry can make the homebuying process more efficient for all involved.

“Though it has been fantastic to see the stamp duty holiday help to democratise homeownership and lead the UK’s economic recovery over the past year, the government must now consider how it will continue to level the playing field following the end of the tax break in just three months’ time.”

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