UK house prices are rising at the fastest rate in 17 years, fueled by cheap mortgages and government grants Business News

According to Nationwide, UK house prices are rising at their fastest pace in more than 17 years, fueled by low mortgage interest rates and a stamp duty holiday.

The building company reported a £ 16,000 increase in the average sale price in April compared to the same month a year ago.

Its monthly index revealed that the average house price hit a new record high of £ 238,831, up 7.1% in one year.

Between March and April alone, prices rose 2.1 percent. Not since February 2004, during the real estate boom that led to the global financial crisis, has Nationwide experienced such a rapid monthly increase.

The Chancellor announced new measures to inflate house prices during his March budget speech. The government has reintroduced government guaranteed loans for people with small deposits and extended the stamp duty holiday, giving tax relief of up to £ 15,000 on purchases of goods.

The latest figures will add to fears that the housing market is going through a bubble inflated by cheap debt and government subsidies.

“Just as expectations about the end of the stamp duty holiday led to a slowdown in house price growth in March, the extension of the stamp duty holiday in the budget caused a re-acceleration in April,” said Robert Gardner, Nationwide Chief Economist.

He added: “Activity in the housing market is expected to remain quite dynamic over the next six months due to the extension of the stamp duty and additional labor market support included in the budget, especially considering low borrowing costs and lots of motivated people. relocate due to changing housing preferences in the wake of the pandemic. “

Experts have predicted that soaring house price inflation will accelerate this year. Samuel Tombs, UK chief economist at Pantheon Macroeconomics, said annual house price growth of at least 10 percent by June “looks likely, given continued strength in demand indicators. “.

“For example, data from Google Trends shows that visits to one of the top three real estate websites this month were 29 percent above their average for the time of year, an increase from to 25 percent more in March.

Likewise, the number of registered house hunters per branch of estate agents in March was 24% above its 2010 average level, a slight increase from 23% in February, according to the National Association of Agents. real estate.

He added: “Further down, however, we expect prices to fall in the fourth quarter, mainly in response to the possible return of the stamp duty threshold to £ 125,000, from £ 250,000 in the third quarter and £ 500,000 currently.

Guy Harrington, managing director of lender Glenhawk, has warned that the “honeymoon” will not last forever.

“The longer the current unsustainable levels of house price growth continue, the sharper and more painful the eventual correction will be,” he said.

“The stamp duty holiday and increased household savings due to the restrictions could paint a positive picture until the fall, but we will see the reality come to fruition once the support schemes end and the magnitude of the slowdown could surprise many. ”

More about this article: Read More
This notice was published: 2021-04-30 12:33:30