The average UK house price reached a record high of £245,000 in September, after jumping by 4.7% over the year, official figures show.
It meant property values were £11,000 higher on average in September than a year earlier, according to the Office for National Statistics (ONS).
The typical London house price also hit a record high of £496,000 in September, the ONS said.
UK house prices grew 4.7% in the year to September, up from 3.0% in August, to stand at Â£245,000.— Office for National Statistics (ONS) (@ONS) November 18, 2020
Average prices grew
âªï¸ 4.9% in England
âªï¸ 4.3% in Scotland
âªï¸ 3.8% in Wales
âªï¸ 2.4% in Northern Ireland
Average house prices increased over the year in England to £262,000 (4.9%), in Wales to £171,000 (3.8%), in Scotland to £162,000 (4.3%) and in Northern Ireland to £143,000 (2.4%).
A stamp duty holiday on property sales in England and Northern Ireland was introduced by Chancellor Rishi Sunak in July. Similar cuts were made on the property sales taxes that apply in Scotland and Wales.
The ONS index is based on completed transactions. As a house sale typically takes six to eight weeks to complete, the price data feeding into its September index has started to reflect these tax changes.
The report said: “The tax holiday is due to end on March 31 2021 across the whole of the UK. This may allow sellers to request higher prices as buyers’ overall costs are reduced.”
The ONS said the recent price increases may reflect a range of factors – including pent-up demand, some possible changes in housing preferences since the coronavirus pandemic, as well as a response to the changes made to property transaction taxes across the nations.
There are also signs that demand for bigger homes has grown. The average price of detached properties increased by 6.2% in the year to September, in comparison to flats and maisonettes increasing by 2.0% over the same period.
Over the past four years, there has been a general slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England.
But the ONS said the start of 2020 was already seeing a pick-up in annual growth in the housing market – before the coronavirus restrictions were put in place at the end of March 2020.
Looking within England, the report said the South West was the English region with the highest annual house price growth, with average prices increasing by 6.4% to £275,000 in the year to September.
The lowest annual growth was in the North East, where average prices increased by 3.3% over the year to September.
The North East region continues to have the lowest average house price within England, at £136,000.
In contrast to the record house prices hit in London, the North East is the only English region yet to surpass its pre-economic downturn peak of July 2007.
Pent-up demand from the summer lockdown and the race to buy before the stamp duty holiday ends has resulted in record activity levelsMark Manning, Manning Stainton
Mark Manning, managing director of Leeds-based estate agent Manning Stainton, said: “September was an exceptional month for the housing market, with sales and asking prices massively up on the same period last year.
“We usually see activity begin to slow slightly in September. But pent-up demand from the summer lockdown and the race to buy before the stamp duty holiday ends has resulted in record activity levels.”
Anna Clare Harper, CEO of asset manager SPI Capital, said: “The fundamental drivers of housing demand are strong and we are in an environment of low interest rates, with reduced rates of new buildings coming onto the market and limited existing stock.”
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said the report “underlines what we were seeing at the tail end of the aftermath of the first lockdown mini-boom”.
He added: “Since then, activity cooled and was replaced by a more cautious approach before the prospect of a Covid-19 vaccine reinvigorated the market.
“The stamp duty concession has proved to be a particularly important contributory factor and will continue to be so until prospects of meeting the spring deadline recede, unless of course the Chancellor is minded to reconsider.”
Lucy Pendleton from estate agents James Pendleton said: “This was the moment the market really entered fifth gear this year, leaping from the doldrums into the jet stream with the full weight of lockdown and the stamp duty holiday behind it.
“After weighing on the market nationally in recent years, London is once again helping to lead the way. Buyers in the capital celebrated the stamp duty changes by delivering record prices that are now only a whisker away from the half a million pound mark. Expect this rate of growth to cool though.”