The Nationwide Building Society revealed that demand for relief from stamp duty and relocation pushed UK house prices up last month to the fastest annual rate in almost seven years compared to the previous month.
The UK Nationwide House Price Index rose 1.8 per cent in May compared to the previous month, with the average home price reaching £243,000, up from £24,000 in the previous 12 months.
Average house prices rose 10.9 percent compared to May last year, up 7.1 percent in the previous month and the fastest pace since August 2014.
Both readings were significantly stronger than the 0.8 percent monthly expansion and the 9.2 percent annual growth forecast by economists surveyed by Reuters.
This is the result of a housing tax break initiated in July last year, in an effort to kick-start the housing market following a decline in home sales during the initial months of the epidemic.
This policy exempts the first £500,000 of stamp duty land tax from the purchase of any property in England or Northern Ireland, and will be in force until the end of June. A £250,000 tax-free allowance is available until the end of September.
However, Robert Gardner, chief economist at Nationwide, said the need for more space following the increase in work also contributed to the rise in home prices.
“It is shifting housing preferences that are continuing the activity, with people reassuring their needs in the wake of the epidemic,” he said.
Nationwide reports that among those walking or considering a move, nearly a third were looking to move to a different area, while about 30 percent were doing so for easier access to a garden or outdoor space.
“Most people are looking to move to less urban areas,” Gardner said.
He said the near-term outlook for the UK housing market remained “bright”, supported by government support for jobs and lower borrowing costs.
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