UK house prices continue to soar, with price growth reaching double digit percentages in May according to new figures.
Nationwide said on Tuesday its house price index (HPI) recorded price growth of 10.9% last month, which was the highest monthly figure seen since August 2014.
The average house price in Britain now stands at a record £242,832 ($345,501) — £23,930 more than it was a year ago. On a monthly basis, prices grew by 1.8% in May.
"The market has seen a complete turnaround over the past twelve months," said Robert Gardner, Nationwide's chief economist. "A year ago, activity collapsed in the wake of the first lockdown with housing transactions falling to a record low of 42,000 in April 2020. But activity surged towards the end of last year and into 2021, reaching a record high of 183,000 in March."
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Nicky Stevenson, managing director at estate agent group Fine & Country, said: "This time last year the average price of a home sank back for the first time since the pandemic began and that’s helping to flatter the pace of growth, and also explains how it has leapt so far in a single month.
"Set that aside, though, and the market’s move in the past 12 months is still staggering."
The fresh data on the red hot property market came as the Bank of England's Sir Dave Ramsden said he and his colleagues were closely monitoring housing costs. Ramsden, a deputy governor, told the Guardian the Bank of England's monetary policy committee (MPC) were "closely monitoring" the market for signs of sustained inflationary pressures.
Soaring house prices and activity levels have been supported by a temporary stamp duty holiday, which was announced by the government last year and extended in March. Gardner said the transaction tax holiday, which is due to come to an end this month, was helping but was not the sole driver. Instead, a so-called "race for space" was driving the market.
"Amongst homeowners surveyed at the end of April that were either moving home or considering a move, more than two thirds said this would have been the case even if the stamp duty holiday had not been extended," Gardner said.
"It is shifting housing preferences which is continuing to drive activity, with people reassessing their needs in the wake of the pandemic."
A third of all sales were motivated by a desire for a bigger garden or outdoor space, Gardner said, as the pandemic leads to more working from home. Most people are also moving to less urban areas.
Gardner said the property market was likely to remain "fairly buoyant" for the time being thanks to low borrowing costs, furlough, and the continued shortage of housing supply.
"Further ahead, the outlook for the market is far more uncertain," he said. "If unemployment rises sharply towards the end of the year as most analysts expect, there is scope for activity to slow, perhaps sharply, though even this could potentially be offset by ongoing shifts in housing preferences, if current trends are maintained."
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