Abu Dhabi, UAEFriday 18 September 2020

How UK house prices defied the odds to reach all-time high

British property sector bounced back in record fashion in August

The annual price increase for UK property in June was 3.4 per cent, according to HM Land Registry's House Price Index for that month. AFP
The annual price increase for UK property in June was 3.4 per cent, according to HM Land Registry's House Price Index for that month. AFP

UK house prices soared to a record high in August, fuelled by the government’s stamp duty cut and pent-up demand from months of lockdown.

The surge marks an extraordinary reversal of fortunes from earlier in the year, when the property market was effectively closed down for April and May.

All of the losses suffered then have now been completely eradicated.

This chart shows how average prices rebounded from £216,403 in June to reach £224,123 in August.

And this chart shows the monthly percentage change in house prices, which rose by an average of 2 per cent between July and August.

“The bounceback in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions,” said Robert Gardner, chief economist at Nationwide Building Society, which generated the data.

Mr Gardner did not attribute the resurgence to Chancellor Rishi Sunak’s stamp duty cut or pent-up demand.

“Behavioural shifts may also be boosting activity as people reassess their housing needs and preferences as a result of life in lockdown,” he said.

Nationwide research in May indicated that 15 per cent of people were considering a move, and subsequent events have proved it to be accurate.

House sales reach a 10-year high in July, property website Rightmove said.

But the good times for the retail property market may well prove to be short-lived.

This price to earnings chart gives a clue as to why, with the ratio at 6.2, only two away from its October 2007 low.

As the UK furlough scheme tapers down to its October end, and with unemployment rising, property experts are predicting an end to the mini house-price boom.

“In the final months of the year we will start to see a reversal in the current rate of house price growth, as the true impact of Covid-19 on the economy shows through,” Andrew Montlake, of mortgage broker Coreco, told The Telegraph.

With stamp duty also set to return in April 2021, the sword hanging above the market bubble is looking ominously sharp.

Updated: September 3, 2020 12:25 AM

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