House prices hit record high with growth across the UK

Official figures have charted a new record high for UK house prices amid chaos inflicted on the market during the COVID-19 pandemic.

The Office for National Statistics (ONS) reported that the UK average hit £245,000 in September – a leap of 4.7% or £11,000 over the year.

UK nations all saw growth, led by England with a 4.9% rise over the past 12 months while Scotland was close behind on 4.3%.

On a more regional basis, the ONS said average prices in London were now at a record high just shy of £500,000 at £496,000, but southwest England recorded the strongest growth on an annual basis.

It reported average prices there increasing by 6.4% to £275,000 in the year to September – double the rate recorded in just the previous month.

Detached home costs were up by over 6% on a UK basis while flat prices were just 2% higher.

The ONS said: “Recent price increases may reflect a range of factors including pent-up demand, some possible changes in housing preferences since the pandemic and a response to the changes made to property transaction taxes across the nations.”

Market experts say demand was stoked and asking prices shot up after Chancellor Rishi Sunak moved in July to give the market a post-lockdown lift by suspending purchase taxes for homes costing up to £500,000.

However, more recent market studies have suggested that the property party may be coming to an end, as the clock ticks down to the end of the stamp duty holiday for England and Northern Ireland that is due in March.

A report by the property website Rightmove earlier this week showed that asking prices were falling again as sellers rushed to find buyers and complete transactions in time.

September is the first month to at least partly reflect the effects of the tax boost as the ONS data only includes completed house transactions, which usually take up to eight weeks to finalise.

There have been widespread reports that strong demand for new homes, coupled with tougher lending criteria among mortgage providers and coronavirus disruption, have contributed to purchase delays.

Jeremy Leaf, former residential chairman of the Royal Institution of Chartered Surveyors, was cautious of recent forecasts that price growth was set to fall back following the end of the first lockdown “mini boom”.

“Since then, activity cooled and was replaced by a more cautious approach before the prospect of a COVID-19 vaccine reinvigorated the market.

“The stamp duty concession has proved to be a particularly important contributory factor and will continue to be so until prospects of meeting the spring deadline recede, unless of course the Chancellor is minded to reconsider,” he said.

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