Robust Demand Pushes U.K. Home Prices to All-Time Highs

Homes hitting the market in the U.K. are more expensive than ever, with prices propelled by a flood of zealous buyers, tax breaks and low mortgage rates, according to a report Monday from Rightmove.

From March 7-April 10, asking prices for newly listed homes jumped 2.1% from the roughly four weeks prior, equating to an increase of £6,733 (A$12,096) that pushed the average national asking price to an all-time high of £327,797 (A$588,909), the online property portal said.

“This is only the second time over the past five years that prices have increased by over 2% in a month, so it’s a big jump, especially bearing in mind that the lockdown restrictions are still limiting the population’s movements and activities,” Tim Bannister, Rightmove’s director of property data, said in the report.

In England, lockdown measures eased last week, and the government has said it hopes to lift almost all restrictions by the tail-end of June if strict conditions are met. Individual timelines are in place in Scotland, Wales and Northern Ireland.

The property market has remained fully open and operating throughout wider limitations, “and is fully active to such an extent that frenzied buyer activity has helped to push the average price of property coming to market to an all-time high,” Mr. Bannister said.

“The stars have aligned for this spring price surge, with buyers’ new space requirements being part of the constellation alongside cheap mortgages, stamp duty holiday extensions in England and Wales, government support for 95% mortgages and a shortage of suitable property to buy,” he added, noting that the coronavirus vaccination rollout is also injecting growing optimism into the market.

In March, the government announced that it would prolong the stamp duty holiday. Introduced last July, the tax break scrapped the transfer tax on the first £500,000 of a home sale, for a maximum savings of £15,000.

Originally set to expire at the end of March, the initiative has been fully extended until the end of June and will taper off by the end September.

But as those economic support measures begin to come to a close later in the year, “some of the froth is likely to come off this spring surge,” though activity is expected to remain robust for the remainder of the year, the report said.