Annual house price growth hit 10.9% last month, the Nationwide has revealed, highlighting a market that has seen a complete turnaround over the past twelve months.
The lender says the double-digit milestone was prompted by a 1.8% increase in prices during May following a 2.3% increase in April, pushing the average house prices to £242,832.
These extraordinary figures mean house prices are rising at their fastest for seven years prompted by the race for space, limited supply and – to a lesser extent – the stamp duty holiday, Nationwide says.
“While March’s spike in transactions was driven by the original end date of the stamp duty holiday, a lot of momentum has been maintained,” says Robert Gardner (pictured), Chief Economist at the Nationwide.
“Our research indicates that the extension to the stamp duty holiday is not the key factor, though it is clearly impacting the timing of transactions.
“Amongst homeowners surveyed at the end of April that were either moving home or considering a move, 68% said this would have been the case even if the stamp duty holiday had not been extended.
“It is shifting housing preferences which is continuing to drive activity, with people reassessing their needs in the wake of the pandemic.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “Buyers wanting more space, trying to take advantage of the extended stamp duty holiday and the lack of supply are all pushing values upwards.”
Jonathan Hopper (pictured), CEO of Garrington Property Finders, says: “The market in many areas remains largely sentiment-led, disconnected from the wider economy and with many buyers purchasing with their hearts not their heads.
“With the supply of homes for sale still far short of buyer demand, house price inflation is set to stay in the eye of a perfect storm for a while yet.”
Lucy Pendleton (pictured) of London estate agency James Pendleton adds: “It is still landlords trying to cash in with low quality stock and vendors of unremarkable homes who continue to struggle.
“Meanwhile properties that tick all the boxes are enjoying price increases that are much more in line with the wider market’s bullish flair.”