ONS: house prices hit double digit growth



Annual house price growth reached 10% in the year to May 2021 after a 0.9% monthly rise, the UK House Price Index from the Office for National Statistics has revealed.

This represents a jump from annual growth of 9.6% in April and brings UK house prices to an average of £255,000.

The North West saw the highest price growth, with an increase of 15.2%, accelerating from an annual rise of 13.8% in April.

Other areas where prices are rising considerably are the North East (11.8%) and the East Midlands (11.0%), while London growth remains the slowest (5.2%) despite signs that prices in the capital are bouncing back.

The price of detached homes has grown by 11.3% compared to 6.5% for flats, signalling that there’s more appetite for larger homes in the current climate.

Nitesh Patel, strategic economist at Yorkshire Building Society, talked up buyers’ interest in the North of England.

He said: “Demand is strongest in areas of better affordability – namely the northern areas, where the average house price is significantly less than the UK average of £254,624.

“With the stamp duty holiday now reduced to the lower threshold of £250,000 until the end of September, we can still expect to see a healthy level of demand in these areas.

“Even once the tax break is removed in autumn, we do not anticipate activity and price growth to slow in response.

“Demand still exceeds supply, with fewer homes from existing stock coming up for sale and new builds still low, low borrowing costs and buyers still re-evaluating their housing needs should all support prices.

“And importantly households in aggregate have built up large stock of excess savings since the first lockdown, which could continue to fuel demand.”

John Eastgate, managing director of property finance at Shawbrook Bank, said: “Stamp duty frenzies may be behind us but the property market’s prognosis remains bright. A combination of underlying resilience and a continued desire from buyers to make moves should maintain strong activity levels.

“The understandable concern is that prices will ease, however low interest rates and a fast-recovering economy underpin long-term price strength. That said, we shouldn’t be surprised if there’s some short term volatility – especially when we look back and compare to the last few months.

“Rising house prices will continue to create challenges for those seeking to buy. This will support the continued growth of the private rental sector, and the buy-to-let market that supports it.”

This level of house price growth is likely bad news for those looking to get on the ladder, as reflected by the commentary from Nigel Purves, chief executive of Wayhome.

Purves said: “For first-time buyers, the rate of house price growth continues to exacerbate affordability concerns, particularly as the Stamp Duty Holiday winds up.

“Even with options like the new Help to Buy Equity Loan, they still face an uphill struggle to get started on the property ladder.

“It’s critical that so called ‘reluctant renters’ aren’t left without a range of credible options that can help them to take that first step.

“We need to see new innovative pathways made available to ensure people aren’t priced out of the market altogether.”

Leave a Reply