British house prices jumped by the most in more than 16 years this month, soaring by 13.4% from June 2020, and demand is expected to stay strong while a coronavirus emergency tax break remains in place, mortgage lender Nationwide said.
In monthly terms, house prices were 0.7% higher than in May as buyers rushed to take advantage of the tax incentive and sought bigger homes after their experiences of lockdown.
Commenting on the figures, Robert Gardner,Nationwide’s Chief Economist, said:
“Annual house price growth accelerated to 13.4% in June,the highest outturn since November 2004. While the strength is partly due to base effects, with June last year
unusually weak due to the first lockdown, the market continues to show significant momentum. Indeed, June saw the third consecutive month-on-month rise (0.7%), after
taking account of seasonal effects. Prices in June were almost 5% higher than in March.
He added that:
“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.
“Activity will almost inevitably soften for a period after the stamp duty holiday expires at the end of September, given the strong incentive for people to bring forward their
purchases to avoid the additional tax.
Nevertheless, underlying demand is likely to soften around the turn of the
year if unemployment rises as most analysts expect, as government support schemes wind down. But even this is far from assured. Even if the labour market does weaken, there
is also scope for shifts in housing preferences as a result of the pandemic
