Annual rate of UK house price growth doubles to 15.5% in one month | Home purchase

The annual rate of UK house price growth jumped to a 19-year high of 15.5% in July, official figures showed, with a typical home seeing £39,000 added to its value over 12 months.

However, commentators pointed out that the annual rate of price growth had been pushed artificially high because in July 2021 prices fell in response to the end of last year’s more generous stamp duty holiday period.

The Office for National Statistics (ONS), which released the figures, said the sudden doubling of the annual rate of price growth – from 7.8% in June to 15.5% in July – “was mainly due to a base effect from the declines of prices seen at this time last year as a result of changes to the stamp duty holiday.’

Jonathan Hopper, managing director of Garrington Property Finders, said the big jump was “first and foremost a statistical anomaly”.

Year-on-year increases in England and Wales were even higher, at 16.4% and 17.6% respectively, although these mask large regional variations: in the south-west of England, annual price growth reached 20.7% in July; while in London the percentage was 9.2%.

Scotland and Northern Ireland were below the UK average at 9.9% and 9.6% respectively.

The stamp duty holiday meant that until 30 June 2021, the first £500,000 spent on a property was tax-free for buyers in England and Northern Ireland. The tax relief was then reduced, with the threshold reduced to £250,000. It returned to the pre-pandemic level of £125,000 on 1 October 2021.

The ONS said the 15.5% rate for July was the highest annual rate of house price inflation the UK had seen since May 2003. It added that the average UK house price was £292,000 in July, “which is £39,000 higher than this time last year”.

Hopper said “those in a nervous mood may want to look away from the official house price data in the coming months as we are in for a rollercoaster ride.”

Sarah Coles, senior personal finance analyst at investment firm Hargreaves Lansdown, said the doubling of the rate of price growth was “not what it seems”, adding: “It does not affect the outlook for the market, which faces real challenges.”

The ONS said Northern Ireland remains the cheapest country in the UK to buy a property, with an average house price of £169,000.

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