Martin Roberts discusses the rise in house prices
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According to a study by the Office for National Statistics (ONS), the increase in house prices from the beginning of this year to June, compared to the same period last year, is up by 3.4 percent – that is the highest annual growth seen in the UK since November 2004. Data published in the Land Registry House Price Index highlighted that in June 2021 an average property in the UK was sold for £266,000 – which amounted to an increase of £31,000 compared to the same period last year.
In England, the average house price rose by 13.3 percent to £284,000.
In Wales, property prices increased by 16.7 percent to £195,000, and in Scotland, houses were priced at £174,000, which equated to a 12 percent rise.
In Northern Ireland, houses were sold at an average price of £153,000 – making property nine percent more expensive.
Property prices in London, however, continue to show the smallest annual growth of 6.3 percent, with the capital having sustained that figure for the seventh consecutive month.
In July 2020, when property, along with other businesses, was being financially impacted by the pandemic, Chancellor Rishi Sunak, issued a suspension on stamp duty tax on property in the UK to serve as an incentive for people to buy and sell their homes.
The holiday scheme meant homebuyers were exempt from paying tax on the first £500,000 of property purchased in England and Northern Ireland, while in Scotland and Wales, the stamp duty threshold was set at £250,000.
The tax break, which was originally due to end this year on March 31, was extended to June 30.
The tax holiday, was reduced on July 1 and is due to end on September 30.
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From October 1, the stamp duty rate will return to its original amount of £125,000.
In its report, the ONS noted that due to the extension of the chancellor’s tax holiday, it was likely the decision had impacted the cost of average house prices in March, which it said were marginally inflated as property buyers tried to speed up the process before the deadline expired.
With the tax holiday driving up demand, the ONS stated that the monthly property transaction statistics, which had been published by HM Revenue and Customs, showed the figures in June 2021 to be the highest on record.
Inflation in property prices appeared to have continued into June 2021, the ONS said, which reflected the impact of the extended stamp duty holiday.
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In June 2021, the number of property transactions in the UK were estimated at 198,240, compared to 183,830 transactions made three months earlier in March.
Property experts from across the UK have reacted to the report.
Scott Taylor-Barr, a Shropshire-based mortgage broker at Carl Summer Financial Services, reflected on the property price hike this year.
He said: “Prices went off the scale in June. Following the introduction of the Stamp Duty holiday, house prices in much of the year to June rose, rose again and then rose some more.”
Expressing scepticism that inflated property prices would continue, Scott added: “As for later this year and early next, the expectation is that while we won’t necessarily see prices fall, a period of zero or negligible house price growth is most likely.”
George Franks, co-founder of London-based estate agents, Radstock Property, who attributed the inflation in house prices to a number of factors, said: “Price growth of over 13 percent in the year to June is borderline obscene.
“It’s a result of the stamp duty holiday, an egregious lack of homes for sale, ridiculously cheap mortgages and the new homeworking culture, which has triggered a rush of transactions.
“London may have delivered the lowest price growth over the past year, but the capital is likely to cool the least in the year ahead.
“Areas of the UK that have risen the fastest may also fall the fastest when the inevitable cooldown begins.”
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