UK average house prices jumped 3.4 per cent over the year to June as the market recovered from lockdown-related falls, according to new government data.
An increase in buyer demand, sales and fresh listings led the surge.
The average house price at the end of June was £237,834 (Dh1.12 million) – £8,000 higher than the same month last year – HM Land Registry's House Index Price Index found on Wednesday, with London’s house prices increasing by 4.2 per cent over the year.
“The increase may partly reflect the unusual conditions in the housing market during the coronavirus pandemic and movement restrictions put in place from March 23 2020,” the Office for National Statistics said in a statement. "People were advised not to move house during the tightest restrictions. As such, property transactions completed during that time may have been more concentrated than usual among those without complicating factors such as a chain.”
The increase in prices in June came before UK chancellor Rishi Sunak rolled out his temporary Stamp Duty Land Tax holiday on property purchases up to £500,000 to help stimulate the market in the wake of the lockdown.
Andrew Weir, the chief executive of investment property management company LCP, said it is advising clients to act now to secure good quality stock and benefit from the holiday.
"To be eligible, and save up to £15,000, buyers must complete their purchases by midnight on March 31 2021. We also expect that from April 1 2021 the previously announced additional 2 per cent stamp duty surcharge will be payable by overseas buyers," said Mr Weir.
"We expect to see a rise in the volume of transactions in Prime Central London as we did in March 2016, the month before the introduction of a 3 per cent SDLT surcharge on additional property purchases."
The UK's property market saw the highest number of exchanges in the week ending August 29 since the end of last year as offers translated into transactions, according to global property consultancy Knight Frank.
UK exchanges were 69 per cent higher than the five-year average, with the rate rising to 94 per cent in London where the housing market took longer to gain traction after the movement restrictions were lifted.
“We have seen higher levels of demand from Middle Eastern investors looking at London and the UK since the market re-opened” said Henry Faun, partner at Knight Frank Middle East. "Underlining how active the market has become, which has also been partly driven by a stamp duty holiday, the Bank of England ... said that mortgage approvals were 66 per cent higher in July than June."
Earlier this month Bank of England governor Andrew Bailey said it was too early to say if the UK’s housing market resurgence was anything more than a release of pent-up demand following lockdown, helped by the temporary cut to property taxes.