House price growth reached 13.2% in the year to June 2021, up from 10% in May, the House Price Index from the Office for National Statistics shows.
The is the highest level of house price growth recorded since November 2004, and brings typical prices up by £31,000 to £266,000.
In June the market was fired up by the stamp duty holiday deadline, as the minimum threshold moved from £500,000 to £250,000 at the end of the month.
John Eastgate, managing director of property finance at Shawbrook Bank, said: “Popular regional and seaside locations have experienced a frenzied housing market in the past 12 months, and this doesn’t look set to end just yet. But a reality check shouldn’t be seen as off the cards.
“Dwindling housing stock combined with a desire for more space has underlined current activity levels and this naturally won’t change overnight. The demand for new ways of living and an ability to work flexibly will drive the market for many years to come, not simply in location but also property type.
“However, September will be a key moment for the market and will offer a clearer understanding of how the rest of the year will go. Traditionally a busy period for listings, activity levels should be sustained but it’s likely that house price growth will soften at both ends of the market.
“In order to adapt to this changing landscape, landlords and investors should look at their current portfolios and consider their future plans. Those with a large number of smaller properties in city centre locations while not all lost, may experience a more difficult period while the market corrects itself.”
The North West saw the highest level of growth (18.6%), followed by Yorkshire & the Humber (15.8%) and the North East (15.3%).
London saw the lowest level of price inflation (6.3%), followed by the South East (10.5%) and the East (12.1%).
Guy Robinson, head of residential agency at Strutt & Parker, expects continued price growth in the months ahead.
He said: “Many have looked forward to taking a holiday across July and August so we expect a return to higher levels of activity in September. As with all markets, the property sector is based on supply and demand, the continued imbalance here in some of the hottest markets will see prices continue to grow.
“When vendors look to sell in September there might be a softening to some price growth, but strong levels of activity will not ease altogether, and properties may considerably outperform house price predictions both this year and in many to come.”
Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “Instead of facing a precipitous plunge from these new highs, we’re more likely to see price rises flatten out, and sales slow as the stamp duty holiday finally ends in September.
“The property boom has been brilliant news for homeowners with no plans to move anywhere larger or more expensive.
“The equity in their home has increased dramatically, which means they may be able to remortgage to free up some cash or for a cheaper deal.
“Mortgage rates are currently at record lows, so those with more equity could get a rate south of 1% at the moment.
“For those planning to downsize, rises will put more money in their pocket, which could be a boon for thousands of retirees.
“However, people hoping to buy for the first time or move up the property ladder have had a difficult 12 months, and will have been thwarted by price rises in June too.
“The average house price has soared £31,000 in year, which means many have to stretch their finances worryingly thin to make a move. For them, news of record highs will be another blow for their house buying dreams.”