House prices smashing all records and upturning all expectations has become the norm of the UK housing market. The latest Nationwide House Price Index shows that house prices are continuing to surge upwards at a record rate, despite the stamp duty holiday winding down.
Home buyers who took the property advice to sit tight and wait for prices to come down in the autumn will be disappointed by the latest figures. House prices saw a whopping 11-per-cent yearly increase and a jump of 2.1 per cent in just one month at the end of August.
What’s behind the continuing house price increases, and what can buyers expect this autumn?
House prices increase by £5,000 in August
Robert Gardner, Chief Economist at Nationwide, admits that ‘the bounce back in August is surprising because it seemed more likely that the tapering of the stamp duty holiday in England at the end of June would take some of the heat out of the market.’ Even more surprising is the ‘substantial’ month-on-month increase, the second-biggest such increase in 15 years, no less.
For some property professionals, this huge house price increase in spite of the winding down of the stamp duty holiday is less surprising. Managing Director of StripeHomes, James Forrester, is confident that ‘the tapered end of the stamp duty holiday isn’t going to be the significant event that many predicted in terms of its impact on property values.’
Where opinions differ is in explaining why prices are still increasing. James thinks that what the trend demonstrates is that the housing market is ‘driven by a desire to own our own homes, not to save a few thousand pounds, and this desire will continue to burn long after the final deadline has expired at the end of September.’
However, for Colby Short, Founder and CEO of GetAgent.co.uk, the heightened activity in the property market is linked to the shortage of homes for sale. ‘There is a continued imbalance between current demand and the level of stock available to satisfy the appetite of the nation’s homebuyers,’ he explains. ‘While these two factors remain out of kilter, house prices will continue to climb.’
‘The lack of supply is also likely to be a key factor behind August’s price increase, with estate agents reporting low numbers of properties on their books,’ he adds.
If you’re planning on buying a house this year, prepare yourself as the situation is unlikely to change. Nationwide now predicts a ‘cloudy’ outlook for the property market, with any decrease in demand – and prices – ‘far from assured.’