UK sees 'behemoth level' of house price growth

The London suburb of Muswell Hill. Rooftops of Victorian homes and street with view across London to the offices and workplaces of Canary Wharf
House price growth was strongest in the North West where prices increased by 18.6% in the year to June 2021. Photo: Getty

UK house prices increased by 13.2% in the year to June 2021, up from 9.8% in May 2021, the government said on Wednesday.

This means the average property in the UK is now valued at £265,668 ($365,362), according to new Department of Housing statistics.

Chart: HM Land Registry
Chart: HM Land Registry

“Another behemoth level of house price growth both on a monthly and annual basis, no doubt influenced by the first of the staggered extensions to the stamp duty holiday as homebuyers purchasing above the £250,000 threshold continued to scramble to secure a saving before the clock expired,” said Marc von Grundherr, director of estate agent Benham and Reeves.

Between June 2020 and 1 July 2021, buyers didn't have to pay any stamp duty on the first £500,000 of their purchase price. Stamp duty has now reverted to kicking in above £250,000.

The tax relief provided a strong incentive to complete house purchases before the end of June, especially for higher priced properties.

"We now know that the initial stamp duty deadline at the end of June has failed to dampen this appetite and the market cliff edge that many predicted is now starting to look very unlikely," said James Forreseter, managing director of letting agents Barrows and Forrester.

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House price growth was strongest in the North West where prices increased by 18.6% in the year to June 2021. The lowest annual growth was in London, where prices increased by 6.3%.

"The London market has seen a lesser degree of property market manipulation as a result of the stamp duty holiday," said said von Grundherr.

"As a result, the capital continues to trail where property price appreciation is concerned but we’re seeing a far more stable market start to emerge and one that is showing greater long-term momentum as both domestic and foreign interest start to return."

In Wales house prices increased by 16.7% in the year to June 2021. Scotland saw house prices increase by 12% and England by 13.3%.

Between May and June 2021, property transactions in the country increased by 74.1% on a seasonally adjusted basis.

Chart: HM Land Registry
Chart: HM Land Registry

The report also showed the number of property transactions in April 2021 surged compared to the year before, largely because the housing market was mostly shut in April 2020 due to the pandemic.

Comparing the provisional volume estimate, volume transactions increased by 111.8% in England, 199.4% in Scotland and by 85.2% in Wales.

The UK Property Transactions Statistics showed that in June 2021, on a seasonally adjusted basis, the estimated number of transactions of residential properties with a value of £40,000 or greater was 198,240. This was 219.1% higher than a year ago.

Watch: What do stamp duty cuts mean for buyers and house prices?