House prices surge to highest levels since 2004 but experts warn demand will ‘soften’

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The property market has continued to show momentum despite the first phase of the stamp duty holiday coming to an end tomorrow. Homeowners who have not completed their property transactions on homes bought for between £250,000 and £500,00 by tomorrow, could be hit with a stamp duty land tax bill. June saw the third consecutive month-on-month rise, after taking seasonal effects into account.

Compared to March 2021, prices were almost five percent higher.

Louisa Fletcher, Property Expert for said: “The Nationwide data this morning recording average annual house price growth of 13 percent won’t be a huge surprise to anyone who is either buying or selling at the moment, as demand over the last year has escalated prices to record levels in many towns and cities around the UK.

“Sellers have been able to command optimal asking prices, which in many cases have been achieved or exceeded, particularly with larger family homes with gardens.

“This has, up until now, been exacerbated due to the lowest levels on record of available homes for sale, creating a sellers’ market that we’ve not seen since the heady days of the housing boom in 2006.

“That said, in the last week or so, the tide is beginning to turn back in favour of well-prepared buyers.

“With the inevitable ‘unexpectedly re available’ properties popping up on property search websites in the last few days, we’ll now begin to see an increase in homes being re-listed for sale to transactions falling through as a consequence of movers not being able to exchange in time to meet the completion deadline tomorrow.

“For those buyers who don’t have to sell a property and have their mortgage approved in principle there may be the opportunity to swoop in and negotiate a lower price, particularly if they are in a good position to enable the seller to keep their purchase and therefore the rest of the chain together.”

All parts of the UK have seen an acceleration in annual house price growth.

Northern Ireland and Wales have seen the largest increases at 14 percent and 13.4 percent respectively.

Meanwhile, Scotland saw the weakest rate of annual growth at 7.1 percent, followed by London at 7.3 percent.

Robert Gardner, Nationwide’s Chief Economist, said demand is “likely to remain solid” in the near term.

He explained: “Consumer confidence has rebounded while borrowing costs remain low.

“This, combined with a lack of supply on the market, suggests further upward pressure on prices.

“But as we look toward the end of the year, the outlook is harder to foresee.

“Activity will almost inevitably soften for a period after the stamp duty holiday expires at the end of September, given the strong incentive for people to bring forward their purchases to avoid the additional tax.

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“Nevertheless, underlying demand is likely to soften around the turn of the year if unemployment rises as most analysts expect, as Government support schemes wind down. But even this is far from assured.

“Even if the labour market does weaken, there is also scope for shifts in housing preferences as a result of the pandemic to continue to support activity for some time yet.”

Which regions have performed best?

Northern Ireland was the strongest performing region, with prices up 14 percent annually – the highest rate of growth for the region since 2007.

Wales is also continuing to show increases with annual house price growth rising to 13.4 percent – the largest rise since 2005.

Scotland was the weakest performing part of the UK but this could be because their stamp duty holiday ended on March 31.

In England, Yorkshire & Humberside was the strongest performing region with prices up 13 percent annually.

House prices in the region have also spiked to a record high of £183,982.

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The East and West Midlands also saw annual house price growth increase to 12.2 percent, and the North saw prices increase by 11.2 percent year-on-year.

London was the weakest performing region in England but price growth has increased compared to last quarter.

As the country begins to open back up, city living could begin to see a resurgence.

The South East, which includes Brighton & Hove, Oxford, Winchester and Southampton, saw annual house price growth increase to 10.9 percent – the first time the region has seen double digit growth since 2014.

The South West has also reached its highest level since 2010, with prices up 10.4 percent annually.

While this is good news for sellers, Graham Taylor, managing director of Nailsworth-based independent mortgage broker, Hudson Rose, said it’s unlikely buyers will secure their “dream home” if they’re not financially ready.

He said: “Unless your financial ducks are in a row, there’s not a cat in hell’s chance you’ll secure your dream home in the current market.

“Activity levels in June weren’t quite what they were like in March and April when meeting the Stamp Duty deadline was still achievable, but there’s still a lot of energy in the market.

“What we’re seeing is potential purchasers getting their financial ducks in a row ready to pounce on the right property when it comes to market.”

Founder and CEO of, Colby Short, agreed and said: “Properties are going under offer at an alarming pace at the moment and buyers continue to swarm the market despite the dwindling hopes of a stamp duty reprieve.

“There also remains a severe shortage of stock to meet this demand and so sellers are achieving a very good price for their property, often at, or in excess of the original asking price.

“While a reduction in buyer demand is expected towards the back end of this year, the scales will remain firmly tipped in favour of sellers due to the imbalance between supply and demand and so we should see a buoyant level of property price appreciation remain for the duration of the year.”

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