House prices grow at fastest rate since November 2004
The average home in the UK now costs £245,432, up from £216,403 in June 2020, according to the latest Nationwide House Price Index.
All parts of the UK saw house price increases during the three months to June.
Northern Ireland and Wales saw the largest gains, at 14% and 13.4% respectively, while Scotland saw the weakest rate of annual growth, at 7.1% closely followed by London at 7.3%.
Robert Gardner, chief economist at Nationwide, said house prices “are close to a record high relative to average incomes”, which makes it “even harder for prospective first-time buyers to raise a deposit”.
He said: “Underlying demand is likely to remain solid in the near term as the economy unlocks. Consumer confidence has rebounded while borrowing costs remain low. This, combined with a lack of supply on the market, suggests further upward pressure on prices. But as we look toward the end of the year, the outlook is harder to foresee.”
Gardner predicts activity to “inevitably soften” after the stamp duty holiday ends in September.
Buyers have not had to pay stamp duty on the first £500,000 of their purchase since last July. However, the scheme begins to wind down on 30 June and ends completely at the end of September.
Danni Hewson, a financial analyst at AJ Bell, said rising house prices in June was not a surprise as home buyers rushed to complete before the end of the stamp duty holiday.
She added “cheap interest rates and the availability of low deposit deals have undoubtedly fuelled price hikes”.
Nicky Stevenson, managing director at national estate agent group Fine & Country, said: “The housing market continues to see an unconstrained rally which may well be going into overdrive as the economy continues to unlock.
“Annual house price growth of this magnitude is something no one thought they’d see, particularly with the stamp duty holiday now tapering out.
“Despite that additional cost to buyers, this remains a relatively frenzied market and desirable properties are not staying on the shelf for very long.”