02 Sep 2020
House prices in Britain hit a record high in August, after posting their biggest increase on a monthly basis since 2004, new data from Nationwide reveals.
The average property was sold for £224,123 last month, climbing 2% from a previous £220,935 in July.
The offers up the latest indication that the UK housing market has been undergoing a property boom in recent months, with pent-up demand following the lockdown period and a stamp duty holiday boosting significant growth in sales and prices.
The figures from Nationwide, one of the UK’s largest mortgage lenders, showed a 3.7% surge year-on-year. This compares to just a 0.5% increase forecast by analysts in July, and a 2% annual growth rate.
Nationwide chief economist Robert Gardner said that this reflected the “unexpectedly rapid” rebound in activity since lockdown regulations were lifted.
Gardner cited not only pent-up demand, but also households reevaluating their “housing needs and preferences” – brought on by the lockdown.
"Social distancing does not appear to be having as much of a chilling effect as we might have feared, at least at this point," he added.
The data arrives just one day after official figures showed lending for new mortgages spiked by 66.2% between June and July. According to a comprehensive survey compiled by the Bank of England published on Tuesday, lenders authorized 66,300 mortgages for residential property purchases in July.
Approvals were only 10% lower than pre-coronavirus levels seen in February, and over seven times higher than the 9,300 mortgages authorized in May when Britain was at the height of a national lockdown and lenders were ramping up efforts to help existing mortgage customers.
In early July, UK chancellor Rishi Sunak rolled out a temporary stamp duty holiday on sales under £500,000 in England and Northern Ireland. The threshold for being exempt from the taxation previously stood at £125,000.
At the time, the finance minister said the new measures would “catalyse the housing market and boost confidence,” as the government was struggling to lift the economy out of a recession.
Managing director of brokers Enness Global Mortgages Hugh Wade-Jones said that the tax cuts had “turbo-charged” the market.
Gardner noted that the stamp duty holiday would fuel “near-term” demand for purchases by accelerating some transactions, but indicated that a long-term rebound could eventually fade.
"Most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down. If this comes to pass, it would likely dampen housing activity once again in the quarters ahead.”