House prices boom as buyers take advantage of stamp duty holiday - ONS
By Abigail Townsend
Date: Wednesday 16 Dec 2020
(Sharecast News) - UK house prices jumped in October, official data showed on Tuesday, as pent-up demand and the stamp duty holiday boosted the market.
According to the Land Registry/Office for National Statistics, UK average house prices increased by 5.4% in the year to October, up from 4.3% in September, and the highest annual growth rate since October 2016.
Average UK house prices now stand at a record high of £245,000, the ONS said, £13,000 more than October 2019.
The unadjusted official house price index rose by 0.7% month-to-month in October, compared to a 0.3% decrease in the same period a year ago. On a seasonally-adjusted basis, prices rose by 0.9%, following a 1.5% improvement in the previous month.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The mid-July increase in the threshold for stamp duty has sent the housing market into overdrive.
"Looking ahead, the overall year-over-year growth rate for national house prices likely will rise further, given that Nationwide's measure was up 6.4% in November and Halifax's was up 7.6%. Nonetheless, we continue to expect house prices to fall by about 2% over the course of 2021, if government policies do not change.
"The return of the threshold for stamp duty at the ned of March, together with a weaker labour market and a reduction in the premium placed on housing once a pandemic is over, all suggest that house prices will wobble."
The EY Item Club noted: "House prices have strengthened as market activity has been buoyed by the release of pent-up demand following the easing of restrictions from mid-May. People seem to be re-assessing their housing needs following the first lockdown and the stamp duty threshold increase."
Howard Archer, the EY Item Club's chief economic advisor, added: "[We suspect] elevated housing market activity and robust prices will prove unsustainable sooner rather than later.
"The EY Item Club suspects that house prices could fall back around 5% over the first half of 2021. The housing market is likely to come under mounting near-term pressure amid restrictions on activity, while there is likely to be a significant rise in unemployment, even though the furlough scheme has been extended until March. Meanwhile, earnings have been limited and are likely to remain so."
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