The property market shows little sign of slowing down after the end of the stamp duty holiday, with prices hitting a record high last month, a survey has found.
The average UK property hit a record £272,992 in November, up 1 per cent compared with October, according to the Halifax house price index.
Sales prices grew at an annualised rate of 8.2 per cent last month, the same pace of growth as in October. The 3.4 per cent quarterly rise is the highest since the end of 2006, Halifax said.
The typical home is almost £13,000 more expensive than in June, and has risen in value by £33,816 since the first lockdown last March.
The continued surge in house prices has confounded expectations as the property industry had braced itself for a slowdown after the government began phasing out tax break for buyers in the summer.
The market has been buoyant since the summer of last year when the Treasury said the first £500,000 of any property purchase would be tax free. The stamp duty relief was extended until the end of June, when it was halved to £250,000. In October, the threshold returned to £125,000.
Transaction levels have surpassed last year’s levels and are close to the volumes seen in 2007 before the global financial crisis. The market has been further buoyed by the flight from city centres, with many people seeking larger properties with more outside space.
Halifax said the market had been underpinned by a shortage of available properties, a strong labour market and fierce competition among mortgage lenders providers keeping rates close to historic lows.
Russell Galley, managing director at Halifax, said first-time buyers were also driving up prices and had paid 9.1 per cent more for their properties, compared with 8.8 per cent for existing movers.
He said the price of flats had risen by 10.8 per cent year on year, compared with 6.6 per cent for detached homes, suggesting the “race for space” had slowed compared with the early phase of the pandemic.
Economists expect the market to slow next year as interest rates and taxes rise and inflation erodes disposable income.
“Looking ahead, there is now greater uncertainty than has been the case for quite some time, with interest rates expected to rise to guard against further increases in inflation. Economic confidence may be also be dented by the emergence of the new Omicron virus variant,” Galley said.
“We would not expect the current level of house price growth to be sustained next year given that house price to income ratios are already historically high, and household budgets are only likely to come under greater pressure in the coming months.”
Wales remains by far the strongest performing nation or region in the UK with annual house price inflation of 14.8 per cent. London continues to lag the rest of the UK, with annual inflation of only 1.1 per cent.