UK house prices rise at strongest monthly rate since 2007

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K home prices “sharpened” to add more than £4,400 to the value in the final weeks where stamp duty assistance, intended to give the residential market a turbo-boost during the pandemic, was available.

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Halifax said average prices in September hit a record £267,587, up 1.7% month-on-month and 7.4% higher than the same period last year.

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Russell Galley, managing director of the mortgage lender, said: “This rate of monthly growth was the strongest since February 2007.”

In Greater London, the average price in September was £510,515, up 1% from last year.

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Galli said: “The ‘Race for Space’ as people changed their preferences and lifestyle choices undoubtedly had a major impact.”

He said: “Looking at the change in prices in the last one year, the prices of flats have increased by just 6.1%, as compared to 8.9% for semi-detached properties and 8.8% for detached properties. This for flats This translates into a cash increase for individual properties of around £41,000, compared to just £6,640.

September was the last month when there was a tax holiday on stamp duty rates. The fee is applicable to all purchases over £125,000 since the beginning of October.

An early full stamp duty holiday began in July 2020, allowing the first £500,000 spent on the property to be tax-free. That break was reduced from July of this year to £250,000 by the end of September.

Galley of Halifax said the end of the holiday may have played some role in the figures, adding that “it is important to remember that most mortgages agreed in September would not have been completed before the tax breaks ended”. He added: “This suggests that a number of factors played a significant role in the evolution of home prices during the pandemic.”

Estate agents have reported demands raised by people seeking more rooms following the lockdown and lucrative mortgage offers.

Galli said: “Against rising pressure on cost of living and an imminent increase in taxes, softening of demand can be expected in the coming months, indicating lower levels of buyer activity already driven by some industry measures. Get.”

But he pointed to lower borrowing costs and improving labor market prospects for buyers who are already employed.

But Guy Harrington, chief executive of residential lender Glenhawk, cautions. He added: “Against a backdrop of painful volatility in the stock market and consumers being squeezed by fuel shortages and rising gas prices, the UK’s obsession with home ownership and the government’s inability to increase supply continues, which clearly shows that There is a water surge in home prices. While the predicted cliff edge is nowhere to be seen, don’t be fooled. The reversal of the ‘space race’ phenomenon and a less favorable credit environment are both inevitable, the combination of which I will bring this juggernaut to a screeching halt.

stamp duty savings

Ahead of the stamp duty holiday launch in June 2020, Halifax said the typical value for a UK property was £239,317, meaning a buyer would face a stamp duty cost of around £2,300.

A month later the zero rate was introduced on homes up to £500,000 (this year fell to £250,000 between July and September as the holiday was shortened) meaning no stamp duty would be payable.

But in September 2021, average home prices were some £28,270 higher – 12 times that initial savings.

Halifax said: “Today, with the tax break over, home-movers face a bill of around £3,400 for the same property because, with an average price of £267,587, they now have a higher SDLT bracket (tax). The 5% rate applies between £250,001 to £925,000).”

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