House prices jumped by 1.7% in July following the re-opening of the property market after lockdown measures were relaxed.
The average house price in the UK currently stands at £220,936 according to Nationwide’s latest monthly house price index, a change of 1.5% year-on-year. In June, the same measure saw house prices fall by -0.1%.
The Stamp Duty holiday announced in early July is thought to have contributed to the bounce in prices, with the building society claiming that it will continue to support prices in the near future.
Robert Gardner, chief economist at the building society, said: “The rebound in activity reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing.
“Behavioural shifts may be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown. Our own research, conducted in May, indicated that around 15% of people surveyed were considering moving as a result of life in lockdown. Moreover, social distancing does not appear to be having as much of a chilling effect as we might have feared, at least at this stage.”
However, the building society warned that July’s bounce could be a false dawn, and that once the full economic impact of coronavirus is felt and redundancies grow as forecasters expect, this is likely to dampen housing activity.
Londoners and southerners benefit most from Stamp Duty holiday
Homemovers in the capital and the south, where house prices are highest, will see the greatest benefit from the temporary increase in the Stamp Duty threshold. The change means that no Stamp Duty is payable on house purchases in England and Northern Ireland up to £500,000.
According to Nationwide around 90% of homebuyers in England won’t pay any Stamp Duty over the next nine months. In Scotland, where the equivalent Land and Buildings Transaction Tax has been temporarily raised to £250,000, 80% of homebuyers won’t have to pay the tax. The threshold for Land Transaction Tax in Wales has also risen to £250,000 until March 2021.
Robert Gardner said: “Typical savings are likely to be fairly modest for the majority of buyers in the north of England, Scotland and Northern Ireland. In Wales, the previous lower threshold for Land Transaction Tax of £180,000 was already above the average house price in the principality. Moreover, some of the stamp duty saving is likely to get passed on in terms of higher house prices.”
House prices rebound in July helped by Stamp Duty holiday