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UK house prices go through the roof despite end of stamp duty holiday

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Wed 08 Dec 2021

UK house prices go through the roof despite end of stamp duty holiday

The property market showed little sign of slowing down after the end of the stamp duty holiday, as prices hit a fresh record high last month, a survey has found.

The average UK property changed hands at a record £272,992 in November, up 1 per cent on 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 was the highest since the 

The typical home is now almost £13,000 more expensive than it was in June, and has risen in value by £33,816 since the first lockdown in March last year.

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 the cost of a home up only 1.1 per cent year-on-year.

continued surge in the housing market has confounded expectations as the property industry had braced itself for a slowdown after the government phased out a generous tax break.

The market has been buoyant since the summer of 2020 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.

The market has been further buoyed by the flight from city centres, with many people seeking larger properties with more outside space. Transaction levels have already surpassed last year’s figures and are close to the volumes seen in 2007 before the global financial crisis struck.

The Halifax said the price growth had been fuelled by a shortage of available properties, a strong labour market, and fierce competition among mortgage lenders keeping interest rates close to historic lows. Russell Galley, managing director at the 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 homeowners on the move.


He said the price of flats had risen by 10.8 per cent year-on-year, against 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 cool 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 rates expected to rise to guard against further increases in inflation,” Galley said. “Economic confidence may be also be dented by the emergence of [Omicron].

“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.”

However, the Capital Economics consultancy predicted that demand would remain strong next year, with the highest quarterly growth in 15 years demonstrating the “underlying near-term momentum in house prices”.

“The Omicron variant is unlikely to be much of a headwind. In fact, to the extent it delays interest rate hikes and ... leads to a further boost to household savings, it could be a net positive for housing demand,” the consultancy added.