'Unexpected mini boom' pushes house prices to record high even before stamp duty holiday boosts demand for property, says Rightmove
- Average asking price up 2.4% since before the lockdown at a record £320,265
- Annual pace of growth is 3.7%, the highest since December 2016
- Buyer enquiries are up an 'incredible' 75% compared to last year
By CAMILLA CANOCCHI FOR THISISMONEY.CO.UK
Asking property prices shot up thanks to a jump in buyer enquiries even before the effects of the Chancellor's stamp duty holiday have had time to kick in, a new report claims.
Property portal Rigthmove says an 'unexpected mini-boom' in demand following the reopening of the housing markets in England, Wales and Scotland has lifted prices to a new record high.
The average asking price of homes coming to the market in Britain is 2.4 per cent higher than in March, just before the lockdown - a rise of £7,640 to a record £320,265. And at 3.7 per cent the annual pace of property inflation is the highest since December 2016, according to Rightmove.
'Incredible' rise in demand has lifted prices to a new record high, Rightmove says
The upbeat report, which is based on properties listed for sale from 7 June to 11 July, is in contrast with Nationwide's latest index showing prices fell for the first time in eight years in June, and four consecutive monthly falls reported by Halifax.
But Rightmove says buyer enquiries are up an 'incredible' 75 per cent compared to last year, and expects activity to pick up even further thanks to the newly introduced stamp duty holiday and as markets in Scotland and Wales come back to full operation.
Miles Shipside, Rightmove director and housing market analyst, says: 'The unexpected mini boom continues to gather momentum as more nations reopen.
'The busy until interrupted spring market has now picked up where it left off and has been accelerated by both time limited stamp duty holidays and by homeowners reappraising their homes and lifestyles because of the lockdown.
'The strength of buyer demand has contributed to record prices, with the 3.7% annual rate of increase being the highest for over three and a half years.'
It comes as Chancellor Rishi Sunak announced home buyers will pay no stamp duty when purchasing properties worth less than £500,000 – representing most of the market – up from a previous threshold of £125,000, in a bid to boost the market.
All regions saw prices rise this month, according to Rightmove
Rightmove claims the of the stamp duty cut has already amplified a surge in buyers' demand, with the number of sales agreed in the five days after the announcement (between the 8th and 12th July) up by 35 per cent on the same days a year ago.
'This is significantly higher than the 15 per cent increase in sales agreed numbers in England measured in the month of June before the announcement,' Rightmove said.
It also said the figures show prices are rising, not falling as predicted by many commentators, and this will be reflected in the coming months in 'other house price reports'.
Again, that is contrast with other forecasts, including those by the Office for Budget Responsibility, which predict prices could fall 2.4 per cent this year and 11.7 per cent next year under their best-case scenario.
Meanwhile, the Centre for Economics and Business Research has predicted that house prices will fall by 5 per cent this year and a further 10.6 per cent in 2021.
Price rises - and Rightmove says price rises will be reflected in other reports too
Marc von Grundherr, director of London lettings and estate agent Benham and Reeves, says the demise of the UK property market 'seem to have been greatly exaggerated'.
'Prices are up, enquiries are through the roof and sales are being agreed like billy-o, and that’s even before the effects of the temporary stamp duty reprieve have had time to kick in,' he said.
And added: 'Prices will rise further as a consequence of this unprecedented demand. Albeit somewhat fabricated by a chancellor determined to bolster the flagging economy via the property market.'
Asking prices are higher in all regions, according to the report, even in London, where prices are 0.5 per cent higher than in March before the lockdown.
Martin Walshe, director at Cheffins estate agents in Cambridge, says it was a 'misconception' to think the market was quite and depressed 'when in fact it really is completely the reverse'.
'Post lockdown we’re as busy as we have been at any time in the past five years and demand is at such a level that we have had over 25 properties go to sealed bids in the past four weeks.' he said.
'It can’t be denied that lockdown really emphasised the need to move for many, particularly those who were considering upsizing or leaving London for the commuter belt and we expect this to continue, particularly as workers are told they may not be going back into the office until next year.'