House prices rise 8.5% as stamp duty break sparks purchases

House prices rise

The annual figure beat expectations following a 1.2% monthly rise in December which took the rate of increase to the highest level since October 2014, the ONS said

UK house prices gained 8.5% in 2021 as the Chancellor Rishi Sunak’s stamp duty holiday sparked a boom in property purchases, according to official figures.

The annual figure beat expectations following a 1.2% monthly rise in December that took the rate of increase to the highest level since October 2014, the Office for National Statistics (ONS) said. Analysts’ average forecast was a 7.6% annual rise.

At the end of December the average house price was at record £252,000. Prices rose 8.5% in England, 10.7% in Wales, 8.4% in Scotland and 5.3% in Northern Ireland.

North West England was the English region with the biggest rise of 11.2% and London had the lowest at 3.5%. UK prices for detached houses rose 10%, which was double the rate for flats as buyers looked for more space amid long-term prospects of working from home.

Chancellor Rishi Sunak raised the threshold for stamp duty to £500,000 from £125,000 early during the pandemic to support the housing market. His move triggered a flurry of purchases as households reconsidered their housing requirements and rushed to save money before the 31 March deadline for the temporary tax break.

About 100,000 buyers could miss out on the saving because they will not complete in time for the deadline, Rightmove has predicted.

There have been calls for Sunak to extend the stamp duty deadline at his 3 March budget to allow the logjam to clear and provide further support for the market.

Samuel Tombs, Pantheon Macroeconomics’s UK specialist, said: Prices surged in the second half of last year in response to the boost from the temporary increase in the threshold for stamp duty, and strong demand from households seeking larger properties due to the pandemic.

Market experts have forecasted a sharp drop in activity after the stamp duty deadline but Rightmove said on Monday that demand was still outstripping supply, suggesting momentum may not drop after the holiday deadline.

Surveys by RICS and Halifax have painted a gloomier picture with RICS reporting agents expecting the market to get worse in the spring.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: The chancellor could breathe some new life back into the market in the budget if he makes some kind of concession for people mid-sale when the stamp duty rules change. However, there’s no guarantee he’ll do this, and even if he does, buyers and sellers may be reluctant to get back into the race.

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