Nationwide Building Society say the average UK property price has increased by more than £30,000 since the start of the Covid-19 crisis.
Despite the phasing out of the Government’s stamp duty holiday at the end of September, average UK house prices continued to defy gravity and carried on regardless. The increases mean that the price of an average home in the UK has exceeded £250,000 for the first time on Nationwide’s index.
Several house price indices have already reported UK averages above a quarter of a million pounds. The Halifax Building Society gave the impression the milestone was passed in October 2020, while the Office for National Statistics (ONS), based on mortgage completions, put the average price at £264,000 in August.
Nationwide stated that house prices rose by 0.7pc in October from the previous month, indicating that the price of the average property has increased by more than £30,000 since the coronavirus outbreak in March 2020. Even so, year-on-year property price inflation stayed at the high level of 9.9pc last month, only just below the 10pc level recorded in September.
Interest rate rises expected to be gradual
Before the tax holiday ended in September, the threshold for paying stamp duty was reduced from £500,000 to £250,000 in July.
Robert Gardner, Nationwide’s chief economist, states demand for homes has remained strong despite the ending of the tax break. This, he says, combined with a shortage of homes on the market and low mortgage rates, helps to explain why price growth remains strong.
There had been expectations that demand for house purchases would slow once the threshold for paying stamp duty was reduced to £250,000 in July and abolished in September.
Yet although it is unclear whether house prices will continue to rise in the months ahead, Gardner describes the outlook for the housing market as ‘extremely uncertain’.
Further house price inflation, he says, will depend on a variety of factors, such as interest rates, consumer confidence and employment levels after the Government pandemic support measures including the furlough scheme ended.
If the labour market remains robust, Gardner believes, conditions may remain fairly stable in the coming months, especially if the market continues to have momentum and there is sufficient stock to allow for a shift in housing preferences caused by the pandemic. He adds it is possible interest rate rises could cool the market.
But any rate rises over the coming months are forecast to be gradual and not expected to have a strong impact on UK borrowers.
HM Land Registry set to increase fees
In news relating to the property market, HM Land Registry (HMLR) has announced that their fees will rise for the first time since 2009 as from 31 January 2022. The increases have been imposed on applications for first registration and the registration of transfers, leases and mortgages of property (scales 1 and 2).
The increase has been formulated so that fees for applications submitted electronically will increase by 11pc, whereas those sent by post will rise by 21pc, a move designed to encourage the property sector to move towards greater digitisation.
The Autumn Budget last week provided HMLR with an uplift of 19.7pc to its spending as it implements its programme of digitisation. Eddie Davies, Director of Digital Services, has said the investment made in recent years ‘will make registering land and property quicker and easier by making error checking and processing times faster’.
The fee increase, Davies believes, will enable them to ‘move forward with plans to provide what customers need, which is more consistency and speed in service delivery, by investing in operational capacity and accelerating the digitisation and automation of services’.
Changes to HMLR fees require to be set by a fee order, a statutory instrument, under section 102 of the Land Registration Act 2002. The order was bought before Parliament on 2 November 2021.