UK House Prices to Stabilise in H2 2021?
The average price of a home in the UK rose 10 per cent between May 2020 and May 2021, according to the latest data from the Office for National Statistics (ONS).
The figures, released yesterday, showed a slightly increase from the period between April 2020 and April 2021, when house prices went up 9.6 per cent. According to the ONS, the average home in the UK increased 0.9 per cent in May 2021 to reach £255,000. This is £1,000 below the high of March 2021.
Strangely enough, the region with the lowest annual growth was London, where house prices rose just 5.2 per cent between May 2020 and May 2021.
There was no shortage of industry comment, much of it agreeing that the escalation in prices is due to slow over the second half of 2021.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “In May, double-digit house price rises hit the dizzying heights we last saw just before the onset of the financial crisis, but this could be as good as it gets for a while. We’re not expecting precipitous falls, but rises are unlikely to be as steep in the coming months. While homeowners may miss the boost to their wealth, it could be a blessed relief for buyers.”
Coles said that the figures for May reflected the ending of the Stamp Duty holiday. “Sentiment takes a while to feed into these figures,” she said, “because the gap between the initial enthusiasm of a house buyer and final exchange is a soul-destroying period of around three months. It means many of the property sales completing by the end of May are likely to have been agreed at the start of March – when Rishi Sunak confirmed the stamp duty extension in the Budget.”
Others were more critical. Karen Noye, mortgage expert at Quilter, said that house prices were ‘completely detached’ from current circumstances.
She added that the economy is coming to a crossroads. “Many businesses will be buoyed,” she said, “by the prospect of the biggest opening since March 2020 on the horizon but simultaneously worried about having to cope with the furlough scheme being rescinded. With the stamp duty taper about to fully go in a matter of weeks the run of house price increases may be soon about to falter.”