The average property in the UK increased in value by £1000, last month – according to the most recent Halifax index. 

It brings the cost of the average house to £261,221. That’s £18,500 more expensive that the same time last year. July was the first month prices have been regarded since the ‘less generous’ Stamp Duty Holiday in England and Northern Ireland saw the £500,000 free tax threshold reduce by 50% to £250,000. In October it will revert to the usual £125,000 figure.

Annual house price rate falls for 2021

According to the High Street lender, the rate of increase for house prices last month was 0.4%, which was less of an increase than in July 2020. This means the annual house price increase for 2021 has fallen to 7.4%.

Russell Galley, Halifax’s managing director said he expected buyer activity to cool over the coming months, resulting in a steadier paced housing market by the end of the year. Despite this, fewer houses available compared to demand combined with continuing low interest rates means prices shouldn’t be falling any time soon – if at all.

Nicky Stevenson, managing director at the estate agents Fine & Country, said the Halifax figures showed that “the era of ballooning house prices is not over yet, even if a little air is now slowly starting to hiss out of the market.”

Greater mortgage availability and government schemes to help fund deposits were also helping to inflate prices. She added: “While annual growth has softened slightly since the frenzied heyday of the stamp duty holiday, there is still a great wall of money coming into the market despite the phasing out of this much celebrated tax break.”

This ‘great wall of money’ from affluent house owners who already have impressive amounts of equity in their existing homes, means many second steppers as well as first time buyers can’t afford to move home – certainly not at the present time. 

In fact, the price difference between a two-bedroom flat and three-bedroom house has doubled over the past decade. According to Zoopla’s figures the difference is £78,000, compared with £39,000 in 2010. 

North – South property divide widens

And, as people move towards greener spaces and bigger properties, the North and South divide continues to grow. Most popular destinations to move to judging by the rise in house prices from the Halifax survey, are the north-west and Yorkshire & Humberside. Wales also saw a large jump in house prices, with as much as 13.8%. London and the south-east, as well as the east of England witnessed far smaller house price jumps. Property in the capital was the lowest increase at just 2.5%.

House prices up 20% over five years says analyst 

Tom Bill, head of UK residential research at property agent Knight Frank expects prices to rise by as much as 20% over the next five years or so. This, he says, will be due to the fact more people will be working from home and looking for more space for their own office. He too sees continued migration to the countryside.

June 2021 was the busiest ever month on record for the UK property market.

HMRC saw 213,120 property transactions over the entire 30 days. That is the busiest since April 2005 when the government body first started recorded sales. 

The Stamp Duty Holiday helped boost the numbers in England and now although the biggest savings in stamp duty have passed, buyers can still save up to £2,500.

One senior analyst said June’s record reflected a “perfect storm of demand.” This, he said, was accelerated by “locked down buyers seeking more space.” The Stamp Duty holiday only exacerbated the situation.

Prices up 30% from previous peak

It’s not only the number of sales that are hitting records in the housing market. Prices too are peaking, with property 30% higher than the peak back in 2007, just before the markets crashed.

Zoopla recorded the average property price as £230,700 – an increase of 5.4% year on year. Meanwhile there were 25% fewer properties on the market for the first six months of this year compared to last.

Around 19 viewers for every property

As a result, NAEA Propertymark, which represents estate agents, reported that its members had approximately 19 viewings for every property on their books last month. Although this too will rebalance as the year continues, say the Association as the number of buyers declines in line with the ending of the Stamp Duty holiday in September.

In terms of cost, nearly half (40%) of properties were sold for more than the original asking price.

In Wales, property has risen by 8.4% over the past 12 months – that’s the highest growth in 16 years. In Northern Ireland it was even higher, with growth of 8.6%. 

Regionally, prices increased most in the North West (an increase of 7.3%) and Yorkshire & the Humber (up 6.8%). 

Places where property has gone up by £100,000

In terms of postcodes, there were locations were the price of a property had increased by more than £100,000 over the previous year. This is according to a survey commissioned by the Sunday Times.

It shows there are at least eight areas that qualify. These are – North Cornwall (ie Padstow and Polzeath), South Devon (Salcombe and Kingsbridge), East Suffolk, South Cornwall (eg Fowey), North Devon (Woolacombe and Croyde), Renfrewshire in Scotland (Kilmacolm) and North Somerset (Long Ashton near Bristol).

Inner London faring very poorly in comparison

Inner London as fared particularly badly over the past year. That’s for two reasons – the first being the absence of overseas buyers during the panic. The second reason is the desire to move to ‘greener pastures’ or ‘costal havens.’ Property in this luxury postcode market is actually 20% down on previous values, according to Savills. It’s believed the first reason will rebalance itself once airport restrictions on overseas visitors are lifted fully.

A Zoopla senior researcher said demand for houses was still far outstripping flats. She expected price increases for family-sized houses to continue over the coming months, peaking at 6% then falling to around 5% by December 2021.

House prices grew by the biggest monthly margin in June since 2007, new figures show. 

The Rightmove survey – which calculates on the basis of asking prices rather than actual selling price – reported a 0.7% jump between June 13 and July 10. This will have been accelerated by buying trying to benefit from the higher Stamp Duty holiday rate benefits. Since July 1 the tax-free figure now sits at £250 (rather than £500) until the end of September.

Asking prices ‘up’ 6.7% over last six months

The property asking price figure has actually increased by 6.7% within the past six months on the Rightmove portal. Government figures from the Office of National Statistics based on completed transactions, showed house prices had risen by 10% between May 2020 and the same period this year. That brought the cost of the average UK home to £255,000 (a jump of £23,000 within a year).

The most popular type of home has been terraced houses. In Wales, these rose in price by 15.2% and in England by 11.2%. Detached homes were the next most popular property in Wales and England, with price rises of 14% and 11% respectively.

North West property is biggest winner

Of course, the prices haven’t been across the board. Prices went up most in the North West (15%). London house valuations have suffered most, with the lowest annual increase of 5.2%). The main reason for this is the pandemic incentivizing more people to move to more rural areas. 

But a shortage of supply is also to blame for escalating house prices, say the Royal Institution of Chartered Surveyors (RICS). And they think this will continue to send prices soaring upwards over the next 12 months.

As far as moving out of cities is concerned though, some of the biggest winners when it comes to house prices have been villages and small commuter towns outside the capital.

Property ‘earning’ more than the average annual salary

In Hastings, Sussex, for instance they have increased so much that 62% of properties there increased more than the average salary this year, according to property portal Zoopla. In the South West, nearly one third of all homes have risen in value more than the house owner earns in a year. In the South East the figure is 28%.

In fact, the Zoopla study shows that one fifth of property in the UK earns more than the average salary (of £30,500).

Mortgage rates become more competitive

As a result, mortgage interest rates have gone down recently. Two high street lenders – TSB and Halifax – are offering two-year fixed interest rate deals of less than 1%. These do however, come with big deposit demands of 40%. 

Both 0.94% fixed rate deals have fees of just under £1000 and are only available for those looking to re-mortgage and those with equity have to pay higher rates.

Mortgage brokers admit the deals are good but that there are better ones on the table – especially those at higher rates but with no fee.

Commercial property investors and landlords are repositioning their portfolios by selling up retail and office space and opting for student campuses and warehousing instead. 

Global investment firm Blackstone are just one of many companies who have gone down this route in recent months, seeing how the pandemic has altered the commercial and residential property outlook. In terms of the latter, city housing is being spurned in favour of villages and greener spaces or coastal retreats. In commercial property terms, it’s all about students – both in terms of accommodation and research & development facilities in particular (ie high-tech life sciences campuses). Warehouses are also faring well with the increase in logistics companies.

As one analyst put it, commercial property interests have switched from retail to “beds, meds and sheds” — residential housing, healthcare and life science property and warehouses.

That’s because, in 2010, retail outlets and offices made up 70% of commercial property sales. Today it’s only around 35%, according to Real Capital Analytics.

‘Golden triangle of Oxford, Cambridge and London’

Earlier this year a 40% stake in Magdalen College’s Oxford Science Park was offered at £100 million – more than five times what the College paid five years ago. The ‘sweet spot’ according to investors in the ‘golden triangle’ between Oxford, Cambridge and London. Around £2.4bn was invested in life sciences property there last year and there’s still room for growth say analysts. Most big investors want to get in from the off though, saying the big money is in building new campuses and labs.

Warehouse shares up 16% post-pandemic

An increase in online shopping – particular during the pandemic – has led to a huge demand for warehouse space by distribution companies.  Warehouse developer Segro shares went up 16% recently. Office supplier British Land and Land Securities have lost around 30% of their share price since the pandemic, while shares for shopping centre supremo Hammerson are down by 75%.

Buy to let landlords ‘growing in confidence’

The sector may have been hit by a raft of tough legislation in recent years, but the buy to let market is still strong. And it’s going from strength to strength, if the last quarterly report by the National Residential Landlord Association’s quarterly Landlord Confidence Index is anything to go by.

This is backed up by a report commissioned by The Deposit Protection Service which found that more than one third (34%) of existing UK landlords had – or were about to – increase their property portfolio. All said they were encouraged by recent price growth. 

House values increase 20% in five years

Records by the Office for National Statistics show the value of the average house in the UK has grown by more than 20% over the past five years (from June 2016 to March 2021). That’s from £212,887 to £256,405. In 1991, the average UK house value was just £57,000.

The rental market too is flourishing, with a 4% increase year on year in May this year, according to the Homelet Rental Index. That’s an average rent in the UK of £997 pcm.

It’s been a long-time coming – although it’s still too soon for many potential house buyers – but Rishi Sunak’s bumper stamp duty holiday extension is to end on Wednesday, June 30.

The tax-free threshold will then halve from £500,000 to £250,000 for three months, before returning to its normal £125,000 at the start of October. 

The forthcoming deadline has rocketed the property market, and which itself has been flourishing since the Chancellor first made his tax-free incentive announcement in the summer of 2020. At the time the UK was in the grip of the pandemic.

Average house increased £22,000 in a year

The latest report from the government’s Office of National Statistics, the average house price had increased by 8.9% from April 2020 to 2021. According to the Halifax figures, that’s worth around £22,000.

Some property analysts are predicting a crash when the Stamp Duty holiday finally peters out; others say the market is resilient enough and that there will be a slowdown in sales but no ‘big bang.’ That’s because demand is high and the UK is still in a housing crisis where there just isn’t enough homes to go round. This means supply is hardly likely to increase.

At the same time the hunt for ‘greener pastures’ is still a priority for many second-stepping city dwellers. First-time buyers have had the chance to save for a deposit during lockdown, increasing demand in that sector too.

Calls to abolish Stamp Duty completely

Despite this, many government economic advisors, as well as those within the property industry, are calling for the Stamp Duty to be scrapped completely.

 Julian Jessop, of the Institute of Economic Affairs said: “The constant tinkering with stamp duty is distorting the property market, leading to big swings both in house prices and in the number of transactions.

“Most economists agree stamp duty is a particularly damaging tax and it would be better to scrap it completely.”

His call was echoed by John O’Connell, chief executive of the TaxPayers’ Alliance who said: “Stamp duty is a terrible tax and the temporary cut has been a boon to many Britons.”

Sunak, meanwhile, has remained quiet on the matter. 

Stamp Duty: from late 1950s to today

The Stamp Duty Land Tax was introduced in the late 1950s at 1% over house prices of £30,000. Considering the average house at that time cost only £20,000, Stamp Duty wasn’t much of an issue for many home buyers.

In the mid-1990s the threshold doubled to £60,000 but calculating the tax became far more complicated, as new sub-thresholds were introduced. By 2000 there were four thresholds, with the highest paying 4%.

Today, it’s not unusual to pay £150,000 Stamp Duty on a home valued at more than £1m, thanks to the fact London homes over £937,000 come with a hefty 10% price tag.

As a result, the tax is viewed as a revenue winner by government. Were it to be abolished, they may be hard-pressed to find a similarly lucrative income stream.

House prices have fallen by 1.9% since March this year.

But official figures from the UK House Price Index for April also show an annual increase of 8.9%. That brings the cost of the average property in the UK to £250,772.

The government property figures – which are compiled by the Office of National Statistics – are calculated on the basis of actual house sale transactions which have gone through. Other Indices measure asking prices or valuations based on mortgage offers so are not quite the same realistic gauge of the property market at the time.

“The slight loss of momentum in the housing market in April reflects the fact that house prices had been inflated in March as buyers rushed to purchase a property before the original end date of the temporary increase in stamp duty to £500K,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

The fact that in Scotland the Stamp Duty threshold reverted to its normal rates in March and house prices fell 4.1%, makes analysts believe a similar scenario will occur in England and Wales in the autumn.

North East sees highest growth

In England the North East pays witness to the biggest annual rise in property values with growth of 16.9%. The average house or apartment there is now valued at £144,032. Property in London has seen the lowest increase, at just 3.3%. It means the average property in the capital is now valued at £491,687.

Wales too has experienced large house price growth, with an annual rise of 15.6%. That brings the cost of the average property there to £185,041.

Semi-detached homes grow most in value

The cost of semi-detached properties increased most in England, with a 10.3% rise. That brought the cost of the typical semi-detached house to £255,589. Terraced houses rose by 9.7% to £219,577. Detached homes were up 9.4% in value to £412,888, while the increase for flats was less than half of semi-detached homes, at 4.7%. The average flat in England, now costing around £230,172.

The average cost of a first-time buyer property is £224,786 – an increase of 9% over the past 12 months. New Build properties have gone up by 10.8% to £333,823.

London sees almost non-existent growth in flats

In London semi-detached homes were also the biggest riser, with an increase of 7% to £626,412. The value of flats rose least, with just a 0.6% increase, making the cost of the average flat in the capital £415,006.

A similar pattern developed in Wales, with semi-detached homes experiencing the biggest price growth (16.8% to £181,164). Flats saw the lowest rise here too, with 12.3% to £124,317.

Repossessions start post-lockdown

There were 138 house repossessions in England in February this year. The highest number – 30 was in the North West. Next highest was the North East with 23 and third was the South East with 20. There were 18 house repossessions in London. Wales had nine.

Data for the UK House Price Index comes from HM Land Registry, Registers of Scotland, Land & Property Services/Northern Ireland Statistics and Research Agency and the Valuation Office Agency.

It is not just sellers, canny savers and surveyors who are benefitting from today’s fast-paced property market, it seems.

Property selling website On The Market this week announced its first profit in six years. Started by a group of estate agents, the portal made a pre-tax profit of £1.1m in the year to January 2021. That compares to a loss of £11.7m for the previous 12 months.

The profit was despite the company offering customer discounts totalling £2.6m during lockdown. 

The hunt for more rural locations together with a desire for larger properties is also driving traffic to the site. In fact, visits to the website increased by 13% to 267m during 2020. 

Increase in New Builds helping boost web traffic

Financial assistance from the stamp duty holiday and new government discounts for first time buyers is also boosting profits. So too is additional New Build listings from developers such as Barratt and Crest Nicholson. At the end of January this year the website had 12,687 property advertisers.

Estate agents behind the website – formed as a challenge to the monopoly of Rightmove and Zoopla – include Savills, Strutt & Parker, Chesterton’s, Knight Frank and two smaller London businesses.

Jason Tebb, chief executive of the company running On The Market said he was confident of ongoing success, particularly now that many homeowners were happy to allow physical visits to take place.

“The economic fundamentals still remain. There’s a low cost of borrowing and huge pent-up demand still, and very few properties on the market comparatively,” he said.

Housing inequality growing says BoE 

Meanwhile housing inequality – particularly between the young and older generations – is at risk of escalating even further, BoE figures show this week. Bank of England chief economist Andy Haldane blames the stamp duty holiday for stoking the flames of the market to the extent house prices were up more than 10% in most UK regions compared to the same time last year.

Earlier this week mortgage lender Halifax recorded house prices as having increased by 1.3% in May, taking the average selling price per property to £261,743. And analysts at the Halifax don’t see any let up in the near future either.

Calling for more homes to be built to help with supply problems Haldane added: “For most people the global financial crisis came like an earthquake exposing those structural fault lines in our societies, of which inequality is among the largest.”

Housing supply and demand gap similar to 2013

Figures from the latest survey by Royal Institution of Chartered Surveyors (Rics) show the largest gap between house supply and demand since 2013.

As prices continued to increase, demand too went up last month. This is mostly due to buyers trying to beat the deadline for the phasing out of the Stamp Duty holiday. In fact, one analyst this week described the rush to buy as “the biggest conveyancing logjam we’ve ever recorded in a decade.”

But the number of properties available are becoming increasingly scarce, according to a spokesman for Rics. Despite this, he predicts more properties for sale will start appearing on listings in July and August.