The average house price in the UK lifted to £261,743 in May, according to the latest index from Halifax.
This is a 1.3% increase on the average price in March and an annual jump of 9.5%.
The lender says prices hit “another record high in May”, with properties rising by more than £22,000 over the past year, and more than £3,000 in the last month alone.
Halifax managing director Russell Galley says: “Heading into the traditionally busy summer period, market activity continues to be boosted by the government’s stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline, after which there will be a phased return to full rates.
“For some homebuyers, lockdown restrictions have also resulted in an unexpected build-up of savings, which can now be deployed to fund bigger deposits for bigger properties, potentially pushing property prices even higher.”
However, Galley suggests higher house prices may be a longer-lasting feature of the market.
The Halifax boss says: “While these effects will be temporary, the current strength in house prices also points to a deeper and long-lasting change as buyer preferences shift in anticipation of new, post-pandemic lifestyles – as greater demand for larger properties with more space might warrant an increased willingness to spend a higher proportion of income on housing.
“These trends, coupled with growing confidence in a more rapid recovery in economic activity if restrictions continue to be eased, are likely to support house prices for some time to come, particularly given the continued shortage of properties for sale.”
Fine & Country managing director Nicky Stevenson says: “There are still some nervous homeowners out there who have been waiting for restrictions to ease before making their move, threatening to ratchet up the level of competition even higher over the next couple of months.
“If the unlocking goes ahead later this month, this new blood, which until now has been cautious due to the pandemic, will enter the market and there will be even more buyers chasing the must-have properties of the year, namely detached homes with plenty of outside space.”
Stevenson adds: “The market normally has a lull in the summer months but, now almost all foreign holidays appear to be off, there’s nothing stopping the freight train that is unbridled demand from crashing straight through June, July and August.”
Together director of sales Sundeep Patel says: “The surge in demand for property we’re continuing to see showed no indication of slowing last month.”
However, he says the end of stamp duty relief, which will come in two phases at the end of June and September, may dampen demand.
Patel adds: “With the stamp duty tax break starting to taper off from the end of this month, we’re likely to see this unprecedented rush for new homes ease off by the time we hit the end of summer.”
