UK average house price hits record high in May

·2-min read
A 'Sold' sign outside a terraced house in London as pressure grows on chancellor of exchequer, Rishi Sunak for stamp duty holiday to be extended in UK Budget, which will take place on on 3 March 2021. The stamp duty holiday, which was introduced on 8 July 2020, is due to come to an end on 31 March 2021. (Photo by Dinendra Haria / SOPA Images/Sipa USA)
UK house prices continued to jump in May. Photo: Dinendra Haria / SOPA Images PA

House price inflation in the UK moved to its strongest level in nearly seven years in May, continuing an upward trend sparked by measures made to support the housing market during the coronavirus. 

According to Halifax's monthly house price index (HPI), the average house price across the UK was £261,743 ($369,973) — a record high and a 9.5% bump from the same time last year. 

The average UK home has increased in value by more than £22,000 over the past 12 months.

The average property added more than £3,000 (+1.3%) to its value in the last month alone.

Read more: Britain's mortgage boom 'pauses' after record borrowing month

“Heading into the traditionally busy summer period, market activity continues to be boosted by the government’s stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline, after which there will be a phased return to full rates," said Russell Galley, managing director of Halifax. 

House prices continued on their upward trajectory. Chart: Halifax
House prices continued on their upward trajectory. Chart: Halifax

“Without wanting to sound like a broken record, this growth just isn’t sustainable. I’ll eat my invisible hat if we don’t see significant pricing retrenchment by Q4, when the true impact of the pandemic on the UK economy reveals itself," said Guy Harrington, CEO of residential lender Glenhawk. 

All UK regions bar the North East saw an acceleration in year-on-year house price inflation last month. The strongest growth was once again recorded in Wales (up 11.9% over the past year), closely followed by the North West and Yorkshire & Humber, both of which posted double-digit annual growth. 

For Wales and the North West, these are the biggest percentage gains since April 2005, and for Yorkshire & Humber since June 2006. 

The South of England, traditionally the driving force of national house price performance, is lagging behind the rest of the country. 

Read more: UK construction grows at fastest pace since September 2014

This is especially the case in Greater London, where average prices are still 3.1% higher than a year ago but growing more slowly than the rest of the country. 

This likely reflects a weakness in city prices given the shift in preference for properties with more space, and recent surcharges on stamp duty for non-UK residents and Brexit. 

However, London property prices were already expensive, having experienced a boom following the global financial crisis, a phenomenon not felt by many other UK regions and nations to anywhere near the same extent.

Watch: Why are house prices rising during a recession?

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