April’s Halifax House Price Index shows that house prices have gone up by a staggering 8.2% in the past 12 months in further proof that these are truly unprecedented times for UK property.
8.2% growth means that close to £20,000 has been added to the average price which today stands at £258,204, 1.4% higher than last month.
Russell Galley, Managing Director of Halifax, said:
“House prices in April eclipsed the record high set the month before as the market continued to maintain its recent momentum.
“The stamp duty holiday continues to add impetus to an extremely active market, magnifying the current shortage of available homes as buyers aim to take advantage of the government scheme.
“The influence of the stamp duty holiday will fade gradually over the coming months as it’s tapered out but low stock levels, low-interest rates, and continued demand are likely to continue to underpin prices in the market.
“However, we do expect recent levels of activity to be sustained over the short-term as buyers continue to search for homes with more space and potentially better suited for their new working patterns.”
‘The current shortage of available homes,’ as Galley puts it, is set to be the most influential element of our housing market for the coming months, perhaps even years.
While the stamp duty holiday will eventually be faded out, it does not mean demand is going to fall to a sustainable level that can be fulfilled by the amount of available stock on the market.
First-time buyers account for roughly 20% of the buying market and, unless they’re spending huge amounts of money, are exempt from stamp duty regardless of the current holiday.
Furthermore, much of the impetus people currently have to buy new homes is fuelled by factors outside of tax reliefs. Lifestyle changes and altered life-priorities are playing a big part – people looking for bigger homes with more outdoor space, increasingly outside of our biggest cities.
The shift away from office-based working is also driving demand in the housing market. Workers who have long been tethered to homes within easy commuting distance to their workplace suddenly find themselves free of those ties. As such, they’re able to move away from big cities where prices have long excluded them from becoming property owners, into the more affordable regional markets up and down the UK.
None of this is going to change. So the biggest continuous problem we face is supply.
There are simply not enough homes to go around, certainly not affordable homes, and every government or local elected official has been able to come anywhere close to addressing the issue.
Sadiq Khan, for example, completely failed to build sufficient homes during his first term as Mayor of London, a pattern which is repeated in most areas of the UK, and having now won a second term in office, people are already lamenting another few years of inactivity.
As we move deeper in 2021, the demand on housing is unlikely to weaken. Pressure must now be put on central and regional government to ensure that enough resources and consideration is directed to building new homes.
Given that pretty much every candidate at last week’s local elections used some sort of housing policy during their campaigning, bringing those promises to fruition feels like the least they can do.