Average house prices rose in August, by 0.7% on the previous month, according to new figures from the Halifax, taking the cost of a UK home to a record high.
This month’s rise is described by the bank as “relatively modest” with the annual rate of house price inflation having slowed to 7.1% (compared to 7.6% in July). The latest figures show prices almost 10% higher than in June 2020, when the housing market began to reopen after the first lockdown.
According to the Halifax, phasing out the stamp duty holiday is having an impact on the number of transactions taking place, compared to a year ago. The threshold at which stamp duty must be paid was reduced from £500,000 to £250,000 in July and will fall again to pre-pandemic levels from 1 October.
However, the leading lender believes other factors are at play. Says Russell Galley, Halifax Managing Director: “We believe structural factors have driven record levels of buyer activity – such as the demand for more space amid greater home working. These trends look set to persist and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break comes to an end later this month.”
A regional breakdown of the figures shows London lagging behind the rest of the country, with a 1.3% annual increase in prices in August. However, with a typical property costing £508,503, average prices in the capital remain higher than other UK regions.
Mr Galley added that a favourable economic environment, with job vacancies at a record high and consumer confidence returning along with a limited supply of homes for sale, is likely to see prices continue to rise, rather than fall, in the near future.
Read the full Halifax House Price Index report here