UK house prices hit record highs and property transactions soared at the start of the year, as buyers and sellers rushed to complete deals before what was expected to be the end of the Stamp Duty holiday.
New figures released on Wednesday by the Office for National Statistics (ONS) showed the average UK house prices increased by 8.6% in the year to February — the highest annual growth rate since October 2014.
The average house price was £250,000 ($347,400) in February 2021, which was £20,000 higher than February last year. The average home price now stands at a record high of £268,000.
The surge in activity came ahead of what was set to be the end of a Stamp Duty holiday in March. That month the chancellor extended the tax break until June.
March's increase in the Stamp Duty threshold "turbocharged the housing market", according to Pantheon Macroeconomics.
Separate data from HMRC showed 180,690 transactions were recorded in March. This was double the total in March last year and the highest number since the government started publishing data in 2005.
"Demand for homes has been remarkable since the start of the year," said Kevin Roberts, director, Legal & General Mortgage Club. "For existing homeowners and those looking to sell their property this will be welcomed news and helps put to bed concerns of a price crash in the wake of the coronavirus crisis."
The red hot market is being fuelled by the Stamp Duty holiday and demand for more space as the nation works from home and kids are home schooled.
Regionally, the North West of England saw the highest annual growth in home prices. Prices increased by 11.9% in the year to February.
London recorded the lowest annual house price growth. Average prices in the capital rose by 4.6% in the year to February 2021 but London maintained its crown as the most expensive region in England, with average home prices of £496,000 in February.
The North East continued to have the lowest average house price at £138,000.
The coronavirus pandemic has had minimal impact on the housing market, as people spend more on housing due to changing needs.
"The long term picture shows a market in very good health, driven by strong regional performances across the board, from the South West, the East Midlands, Yorkshire and the Humber and the North West," said James Forrester managing director of Barrow and Forrester.
"As we enter what is often the busiest time of year, we can expect the market temperature to rise and house prices to follow suit for the remainder of the year, at the least.”
Experts anticipate house prices growth will slow by the end of the year after the Stamp Duty holiday ends.
Ross Counsell, chartered surveyor and director at Good Move, said: "Looking further into the year, we still stand by our predictions that house prices will begin to fall post-Stamp Duty Holiday, as well as seeing house prices in our cities, and demand for flats increase once more."
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