Annual house price growth swelled 13.4 per cent in the UK in June, the highest rate of annual growth since November 2004, according to Nationwide.
London house prices grew just 7.3 per cent in this quarter, seeing some of the weakest growth in the UK, just behind Scotland.
The average price for a home in the capital is now £509,935. Although the annual increase lags behind every other English region, it is still higher than the annual 4.8 per cent change in the last quarter.
Greater London house prices, which includes Luton, Watford, Sevenoaks and Woking, faired slightly better but still in the bottom three regions with an annual growth rate of 8.2 per cent – climbing to an average of £394,295.
The average price for a home in the rest of the UK is now £245,432 – up from £242,832, Nationwide reported.
“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,” Nationwide’s chief economist, Robert Gardner, said, adding that June prices were a near five per cent higher than in March.
Prices grew 0.7 per cent month-on-month, after taking account of seasonal factors, the bank said.
First time buyers
Mortgage payments are still affordable, Gardner said, warning that deposits will be the major hurdle for most first time buyers.
“House prices are close to a record high relative to average incomes. This is important because it makes it even harder for prospective first time buyers to raise a deposit,” Nationwide’s chief economist continued.
The average 13 per cent lift to prices for homes in the UK may bring some relief to those not eyeing the property ladder but could dampen hopes for prospective buyers, analysts cautioned.
It is “a case of lucky 13 for owners, but unlucky 13 for first-time buyers,” Anthony Codling, CEO of property comparison site Twindig, said.
Director of property investment company Track Capital, Tobi Mancuso, added that “the housing market is like the Wild West at the moment – and properties are flying off the shelves whether they’re good, bad or ugly.
“A scarcity of properties and the stamp duty holiday has created a situation where buyers feel like they’re in the last chance saloon, creating panic buying and pushing up asking prices.”
The stamp duty holiday has played a part in the swelling prices, CEO of The Guild of Property Professionals, Iain McKenzie agreed.
“With only days to go until the deadline to take advantage of the stamp duty holiday in full, the market is seeing a last minute scramble to complete sales.”
‘Last minute scramble’
First time buyers must not despair, however, as the record growth cannot last forever, CEO of estate agents Chestertons, Guy Gittins, advised – unless they are eyeing the capital’s lucrative property market.
“Buyer enquiries and the number of agreed sales reached record heights in Q1 which simply couldn’t be maintained long-term.
“Demand is currently met by supply and Chestertons brought 38 per cent more properties to the market than this time last year. Due to the volume of available stock, price inflation has and will continue to be kept at bay.
“The same can’t be said for the micro-markets of prime central London, however, where our branches registered a clear spike in buyer interest and our Knightsbridge office finalised eight sales in just one week this month. Due to limited stock, we expect prices to increase accordingly.”