With purchasers rushing to take advantage of the government’s stamp duty holiday, the average price of a home in the UK increased by 10.2% in the year to March, up from 9.2% in February. This is the highest annual growth rate the UK has seen since August 2007, said the ONS.
The average price of a property in the UK hit £256,000 in March, up £24,000 year-on-year. Prices rose 2.1% between February and March, thanks also in part to the low cost of borrowing.
Average values increased over the year in England to £275,000 – up 10.2%, the average in Wales is up 11% to £185,000, in Scotland a 10.6% rise leaves the average price of a home at £167,000, while in Northern Ireland, the average is up 6% to £149,000.
The ONS said the average price of detached properties increased by 11.7% in the year to March, while the price of flats and maisonettes rose by 5%.
Nick Leeming, Chairman of Jackson-Stops, believes that the latest house price data provides a clear indication of how much the pandemic has shifted the property market over the past 12 months.
He commented: “House prices have increased by a staggering 10% on the year – the highest annual growth seen since before the financial crisis of 2007 – with buyers now paying on average a record £256,405 for their home.
“Prices in the North East and Yorkshire continue to lead the way. But, even in London, buyers are paying £20,000 more than they were before the pandemic.
“The number of new applicants that registered with our branches in March was on par with the number that signed up when the market reopened last June. Given the strength of demand, and the fact this is linked to fundamental shifts in people’s lifestyle priorities, we don’t see the market cooling in the near future.”
More than 12 months of on-off lockdowns has “completely unshackled the property market from the wider economy”, according to Jonathan Hopper, CEO of Garrington Property Finders.
He said: “The UK economy shrank by 6.1% between the first quarter of 2020 and the same time this year. Yet those same 12 months saw the average home rocket in value by 10.2%.
“The boom isn’t just one for the history books. It’s also the product of a perfect storm of factors. Years of demand that had been repressed by Brexit uncertainty were unleashed just as the difficulties of lockdown living forced thousands of people to fundamentally reassess what they want from their home.
“The stamp duty holiday fanned the flames, spurring thousands of would-be buyers into action.
Strong competition for properties across many parts of the country has driven up prices, with some purchasers paying a price premium well in excess of any tax saving provided by the stamp duty cut.
Andrew Montlake, managing director of the independent mortgage broker, Coreco, commented: “The UK property market has no understanding of economic logic. The economy is deeper in the red than ever before and yet house prices are rising at an astronomical rate. It’s a real-life Theatre of the Absurd.
“And yet the play may carry on for some time. Although the Stamp Duty holiday is now starting to tail off as a driver of transactions, people these days want something altogether different from their properties, namely space and a home office.”