Average UK house price jumps by £25,000 in a year
The average UK house price was £25,000 higher in August than a year earlier, according to official figures.
Property values increased by 10.6% over the year to August 2021, up from 8.5% in July, the Office for National Statistics said.
It added: “The average UK house price was £264,000 in August 2021, which is £25,000 higher than this time last year.”
The average house price in Scotland surged by 16.9% to a record high of £181,000.
Average house prices increased over the year in England to £281,000 (a 9.8% annual increase), in Wales to £195,000 (12.5%) and in Northern Ireland to £153,000 (9.0%).
In England, for the ninth month in a row, London was the region with the lowest annual house price growth (7.5%) – although prices there still hit a new record high in August.
The North East had the highest annual house price growth in England, with average prices increasing by 13.3%.
London’s average house price remained the highest of any region in the UK at an average of £526,000 – the highest on record, the ONS said.
The North East continued to have the lowest average house price, at £149,000.
A stamp duty holiday in England and Northern Ireland was tapered from July, before ending completely from October.
ONS head of economic statistics Sam Beckett said: “Annual house price growth rebounded in August from the dip seen last month following changes to the stamp duty holiday.”
These figures tell the story of the 'flight from the city', with London prices increasing at the slowest rate in the country and Scotland roaring ahead
She added: “Scotland saw the highest growth in house prices and although London’s growth was once again the weakest, it has picked up significantly from last month’s trough.”
Nitesh Patel, strategic economist at Yorkshire Building Society, said the average house price is more than £33,000 higher than before the start of the coronavirus pandemic, adding: “This is significantly more than what many people earn in a year.”
He added: “With the stamp duty holiday now having ended, we expect the recent high-level activity to cool.
“That said, demand is still strong with evidence that homeowners are still evaluating their housing needs and many households have built up large levels of savings throughout the pandemic, increasing deposit sizes for those looking to upsize.
“And on the supply side, the number of properties coming on the market for sale is shrinking, providing further support to prices.”
Iain McKenzie, chief executive of the Guild of Property Professionals, said: “The underlying cause of this current wave of price rises is the shortage of stock available from estate agents.
“The number of properties available to buy started to dwindle after the first lockdown and this trend looks set to continue while demand remains high.”
He added: “These figures tell the story of the ‘flight from the city’, with London prices increasing at the slowest rate in the country and Scotland roaring ahead.”
I expect we’ll see more stable activity over coming months, particularly as we now enter the traditionally active autumn period
Jamie Durham, economist at PwC, said: “Looking ahead, we expect that house price growth will remain relatively buoyant, but likely at a slightly lower rate than we have seen over the last few months as a result of conditions normalising post-Covid-19 and weakening consumer confidence driven by inflation and ongoing stock issues.
“It is unlikely that there will be a significant decline in the rate of growth, however, as the underlying factors driving up the market should continue.
“Inflation remains one risk to the outlook. While we expect the current price pressure to be temporary, the Bank of England may move to increase interest rates if there is evidence price growth may be sustained, which would then impact house price growth by limiting affordability.
“However, any such move by the Bank of England is unlikely to be imminent given the current drivers of inflation and would likely be small in the first instance, limiting the impact on the housing market over the coming months.”
Nick Leeming, chairman at Jackson-Stops, said: “Whilst financial incentives to sell, combined with the desire to relocate to areas offering a higher standard of living, have contributed wholeheartedly to this year’s frenetic activity, it was undeniably the unbalanced relationship between low stock and high demand amongst purchasers that drove prices to the levels seen.
“I expect we’ll see more stable activity over coming months, particularly as we now enter the traditionally active autumn period.”
Mike Scott, chief analyst at estate agency Yopa, said: “Yopa expects a further (house price) acceleration in the September figure, since the completions on which it is based will include many purchases that were rushed through to beat the (stamp duty) tax deadline.
“We then anticipate only a slight slowdown later in the year, after the effects of the stamp duty holiday have finally dropped out of the figures, since there are still many other factors boosting housing market activity and prices.”
Lawrence Bowles, senior research analyst at Savills, predicted: “Affordability and access to mortgage finance will moderate price growth in London and the South over the next five years, while we expect faster growth in the North.”
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