Property values increased by 1.4 per cent month on month and 8.2 per cent annually, the highest annual growth rate in five years, and passing a record high set in March, Halifax’s latest house price index has found.
The lender’s MD Russell Galley said the market last month continued to maintain its recent momentum. "In cash terms, almost £20,000 has been added to the value of the average home since the market had essentially come to a standstill in April 2020.”
He said the stamp duty holiday – Scotland’s equivalent tax is land and buildings transaction tax – continues to “add impetus to an extremely active market”, but he predicted that its influence will “fade gradually” over the coming months.
"However, we do expect recent levels of activity to be sustained over the shortterm as buyers continue to search for homes with more space and potentially better suited for their new working patterns.
"Savings built up over the months in lockdown have given some buyers even more cash to invest in their dream properties, while the new mortgage guarantee scheme may have eased deposit constraints for some prospective home-buyers who previously thought their first step on the housing ladder was a few years away."
Indeed several major lenders are now offering 5 per cent deposit mortgage deals.
Mr Galley added: "There is growing optimism in the long-term outlook of the UK economy as the vaccination programme continues at pace, yet we remain cautious about the medium-term prospects of the housing market.
"As we said in March, the current levels of uncertainty and potential for higher unemployment as furlough support ends leads us to believe that house price growth will slow to the end of the year."
Mike Scott, chief analyst at estate agency Yopa, however took a more optimistic view for the rest of 2021. “We expect the market to remain strong at least until the end of the year, with prices supported by a severe shortage of homes for sale and people wanting to make a move and get on with their lives as the pandemic finally recedes and life returns to normal."
Also commenting was Jonathan Hopper, chief executive of Garrington Property Finders, who said: “The arrival of the Stamp Duty holiday last summer is what first knocked the property market out of neutral and into first gear.
“But since then a string of other factors have pumped nitroglycerin into the fuel tank. March was nothing short of frenetic, as 191,000 homes were sold across the UK in just one month – the highest number on record.
“For now the yawning imbalance between supply and demand is forcing prices up at breath-taking speed, especially in the hottest hotspots of South West England and parts of Scotland.
“Fortunately, the growing sense that the country is accelerating towards the light at the end of the Covid tunnel is starting to encourage more sellers to put their homes on the market too. As supply improves, that should help the market achieve better equilibrium, but for now price growth is glowing white hot.”