Changing housing preferences ‘continue to drive activity’
House prices in the UK rose at an annual rate of 10.9%, the largest increase in about seven years.
According to Nationwide, this rate is likely to increase even faster as people look for new homes in the aftermath of the pandemic.
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Nearly 70% of homeowners said they were considering moving and would proceed with the move even if the UK government’s tax incentives were not extended. This is according to a survey conducted by Nationwide at the end of April.
Robert Gardner, chief economist at Nationwide, said changing housing preferences “continue to drive activity as people reassess their needs in the wake of the pandemic.”
Figures released by Nationwide on Tuesday are the latest to show how house prices have risen, hitting a record high of £242,832 on average.
Bank of England Deputy Governor Dave Lumsden said there remained a risk that demand would outstrip supply, potentially creating a risk of inflationary pressures.
“We are looking closely at the housing market and a number of real indicators,” Ramsden told the Guardian.
According to Nationwide, average home prices rose 1.8% in May compared to the previous month.
According to a Reuters survey of economists, prices are expected to rise by 9.2% on an annual basis and by 0.8% from April.
After the first lockdown, housing transactions fell to a record low of 42,000 in April 2020.
By March 2021, activity had reached an all-time high of 183,000 as activity spiked at the end of 2020 and into the new year.
Prices have completely turned around since the pandemic began, said Robert Gardener, chief economist at Nationwide.
Mr Gardner said: “More than two-thirds of homeowners surveyed at the end of April who were moving or considering moving said they would not have done so even if the stamp duty holiday had not been extended. “I answered that I would have done so,” he said.
“As people reassess their needs in the wake of the pandemic, housing preferences are changing, which continues to drive activity.”
Sam Mitchell, CEO of online estate agency Strike, said: “In contrast to the British weather, the UK property market was red hot in May with house prices showing no signs of cooling down.
“While the looming stamp duty holiday deadline is sending markets into a frenzy, there are other factors at play as well.As restrictions are lifted and the vaccination rollout progresses, a sense of normalcy returns. Meanwhile, 95% mortgage offers have increased significantly, helping more first-time buyers enter the market.
“Many will wonder whether this level of demand will continue once the stamp duty holiday starts to wind down, but it is important to remember that the UK still faces a huge supply and demand imbalance problem, especially when it comes to outdoor For homes with space and in rural areas, prices will continue to rise as demand outstrips demand due to a lack of new stock.Additionally, the government will do something to support the market once the stamp duty holiday ends. I might be planning something else.”
