According to the Nationwide house price index, the growth was stronger than in March when it was 5.7 per cent, and not far off the peak of 7.3 per cent recorded in December last year.The month-on-month rise of 2.1 per cent was the best such growth since February 2004, after taking account of seasonal effects.
“Just as expectations of the end of the stamp duty holiday led to a slowdown in house price growth in March, so the extension prompted a re-acceleration in April,” said Robert Gardner, chief economist at Nationwide.
He said that while the tax break was affecting the timing of transactions it was not the main motivation for moving home.
“Three-quarters of homeowners surveyed at the end of April, who were either moving or considering a move, said this would have been the case even if the stamp duty holiday had not been extended,” Gardner said.
The tax break extension and labour market support measures announced in the March budget meant the housing market “was likely to remain fairly buoyant over the next six months,” he added.
“With the stock of homes on the market relatively constrained, there is scope for annual house price growth to accelerate further in the coming months.
However the longer-term outlook was “far more uncertain. If unemployment rises sharply towards the end of the year, there is scope for activity to slow, perhaps sharply,” Gardner said.
Is a correction coming?
Anna Clare Harper, chief executive at asset manager SPI Capital, said the market had been driven by the desire to improve surroundings encouraged by lockdowns, low cost of borrowing and property being an attractive, stable asset.
“These drivers are likely to hold up throughout 2021 and the good news is that property tends to hold its value well through times of uncertainty. The next trend is net zero, and environmental efficiency as a key driver of house prices and values,” Harper said.
Jeremy Leaf, proprietor of an independent London estate agency, and former RICS residential chairman, said the price bounce-back “should be sufficient to ensure there is no correction when the stamp duty holiday starts to taper at the end of June.”
But Guy Harrington, chief executive at lender Glenhawk, foresaw a less upbeat future for house prices. “The honeymoon won’t go on forever, and the longer the current unsustainable levels of house price growth continues, the sharper and more painful the eventual correction will be,” he said.
“The stamp duty holiday and higher household savings because of restrictions might paint a positive picture until autumn, but we will see reality set in once the support schemes end, and the scale of the slowdown then might catch many by surprise,” Harrington said.
Tomer Aboody, director at lender MT Finance, said: “The biggest factor is the lack of properties, which is pushing up prices.”
Mark Harris, chief executive at broker SPF Private Clients agreed: “Lack of stock is pushing up prices. Those able to save during the pandemic, who still want to move, have bigger deposits and more buying power, but they are finding the property they wish to buy is more of a challenge.”