Soaring house price index show market boom goes on

House prices are 7.1 per cent above their level a year ago as the boom continues.

The latest house price index, from the Nationwide, says it’s still the stamp duty holiday driving business.

"Just as expectations of the end of the stamp duty holiday led to a slowdown in house price growth in March, so the extension of the stamp duty holiday in the Budget prompted a re-acceleration in April” Nationwide chief economist Robert Gardner says.

He adds that there’s scope for more rises over the summer due to limited supply and a continued desire to move as a result of the pandemic, which continues to inhibit demand for smaller city homes.

But Gardner warns of possible trouble ahead if unemployment picks up as furlough and other government support mechanisms ease.

Agents are nonetheless delighted at the continuing bull run.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “The bounce-back highlighted by the Nationwide figures, which we have also seen on the ground, should be sufficient to ensure there is no price correction when the stamp duty holiday starts to taper off at the end of June. 

“Continuing shortage of stock, as well as the new government-backed 95 per cent mortgage and furlough support, are providing further assistance for the market.

“Broader rollout of the vaccine and easing of lockdown restrictions is increasing confidence in the economy. This economic recovery is giving an additional boost to housing market activity rather than the housing market supporting the economy, which was the case when the pandemic first struck.”

And the director of Benham and Reeves, Marc von Grundherr, says: “London, in particular, is seeing a slow but steady return to health that bodes very well for the future. There’s a certain energy starting to return to the capital, driven by a move back towards the workplace and a reopening of the hospitality sector albeit with some restrictions remaining in place.”

PropTech entrepreneur Anthony Codling, from Twindig, strikes a different note, saying: “Over the last 12 months average house prices have increased by £15,916, almost £1,000 bigger than the maximum stamp duty saving. The Stamp Duty holiday extension certainly avoided a cliff edge, but is it building an even bigger cliff?”