UK house prices surge £20,000 in a year, fuelled by low mortgage rates and stamp duty holiday
The data will add to concerns that the UK housing market is experiencing a bubble
(AFP via Getty Images)The average UK house price surged by £20,000 in twelve months to February, marking the fastest annual growth rate since October 2014.
House prices jumped 8.6 per cent to £250,000, the Office for National Statistics (ONS) said. Separate figures from HM Revenue and Customs (HMRC) showed that double the number of home sales went through in March 2021 compared to the same month a year earlier.
An estimated 190,980 sales took place, up from 94,380 in March 2020. The figure was the highest for any month since HMRC began compiling data in 2005.
The figures will add to concerns that the UK housing market is experiencing a bubble inflated by low mortgage rates and government policies which have further boosted property prices.
In last month's Budget, Rishi Sunak announced the extension of a stamp duty holiday in England and Northern Ireland that cuts up to £15,000 off the cost of purchasing a home.
An equivalent holiday in Scotland ended on 31 March. In Wales, a property tax holiday there was extended to 30 June. The rise in property prices across all UK nations has more than cancelled out the stamp duty saving.
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The Help to Buy scheme has also been reopened, providing a further public subsidy to the housing market. Under the scheme, buyers with low deposits can take out government-backed loans of 20 per cent of the value of a home, or 40 per cent in London.
Banks began offering Help to Buy deals this week after the scheme opened for applications in December.
Average house prices increased over the year in England to £268,000 (an 8.7 per cent increase), in Wales to £180,000 (8.4 per cent), in Scotland to £162,000 (8.0 per cent) and in Northern Ireland to £148,000 (5.3 per cent).
The northwest was the English region with the highest annual growth in average house prices (11.9 per cent), while London recorded the lowest (4.6 per cent).
London's average house price remained the most expensive of any region in the UK at an average of £496,000 in February.
Experts said the buoyant market was being driven partly by buyers looking for more space during the pandemic.
Nitesh Patel, strategic economist at Yorkshire Building Society, said: "Available properties appear to be getting snapped up quickly, adding upward pressure on prices.
"Buying behaviour continues to be dominated by the pursuit for space, with detached homes rising by 9.1 per cent in the year to February 2021, in contrast with flats and maisonettes, which saw a 6.7 per cent increase over the same period.
"With the stamp duty relief in place in its current form until the end of June, and the jobs market fairly resilient, we don't expect the housing market dynamics to change anytime soon. As a result, we expect price momentum to continue for a few more months.
"However, the jobs support scheme concludes in September and prices rising at a faster pace than salaries means affordability will become an issue for some buyers - so at this point, we are likely to see housing market activity cool."
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