Average property prices in the United Kingdom grew more in July than at any other time in the past 11 years, suggesting the housing market could recover much faster than predicted. According to the latest figures released by Nationwide, July brought about the biggest single-month increase in average house prices since August 2009.
The lender’s monthly House Price Index detailed annual property price growth in July of 1.5%, along with an equally impressive month-on-month uptick of 1.7%. This improvement in previous months’ performance is credited largely to a surge in activity among buyers and sellers, spurred by the relaxation of lockdown restrictions.
Speaking on behalf of Nationwide, chief economist Robert Gardner spoke with confidence that July’s impressive property price spike “reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.”
“The rebound in activity reflects a number of factors. Pent-up demand is coming through, where decisions taken to move before lockdown are progressing,” he continued.
“Attitude shifts may be boosting activity as people reassess their housing needs and preferences as a result of life in lockdown.”
He also highlighted an extract from Nationwide’s report, which suggests that a full 15% of all households across the UK are considering relocation due to their experiences during lockdown and shifting priorities.
“Moreover, social distancing does not appear to be having as much of a chilling effect as we might have feared, at least at this stage,” he stated.
The impact of the stamp duty holiday
Other economists have highlighted the effect of the recent stamp duty holiday introduced by the government, which has the potential to save homebuyers across the UK many thousands of pounds.
“It’s no coincidence that this upturn has come at the same time as the introduction of a stamp duty holiday on purchases up to £500,000 ($627,440),” said MT Finance director Tomer Aboody.
“Brexit and COVID-19 aside, stamp duty has been the biggest negative influence on the housing market in recent times since the introduction of higher rates on more expensive properties.”
“This has to be resolved and dealt with, or whatever bounce we have seen in the past few months will only be a temporary one.”
“The government not only has to look at extending the existing holiday but possibly making it permanent, while also looking at benefiting the higher end.”
As part of the government’s ongoing stimulus plan to restart the UK economy, Rishi Sunak confirmed early last month that the threshold for stamp duty in England will be raised from £125,000 to £500,000 on a temporary basis. As a result, approximately 90% of all home buyers in 2020 will pay no stamp duty at all, said Mr Sunak.
Nationwide’s Robert Gardner also spoke with confidence that the momentum in housing marketing shows no signs of slowing soon, at least.
“These trends look set to continue in the near term, further boosted by the recently announced stamp duty holiday, which will serve to bring some activity forward,” said Gardner.