They reached a record high of £266,000 in June 2021, which is £31,000 higher than this time last year.
Average house prices increased over the year in England to £284,000 (13.3%), in Wales to £195,000 (16.7%), in Scotland to £174,000 (12.0%) and in Northern Ireland to £153,000 (9.0%).
Within England, the North West was the region with the highest annual house price growth, with average prices rising by 18.6% in the year to June 2021, up from 14.2% in May this year.
Meanwhile, London had the lowest growth rate where average prices increased by 6.3% over the year to June 2021, higher than May 2021’s rate of 5.2%.
However, London’s average house prices remain the most expensive of any region in the UK at an average of £510,000 in June this year.
Industry responds to house price surge
Lucy Pendleton, property expert at James Pendleton, said: “Prices went berserk as the stamp duty taper closed in [and] the pace of growth set in the North West is frankly astonishing.
“This is the last time this year, or even in our lifetimes, that you’ll see growth spurts like this in response to government support.
“Scenes like this are only possible in those areas starting from a lower base, and there’s a big question mark over how many of these buyers really made a saving.
“Amid fierce competition, there’s a good chance that many of them became so committed to a particular move that the financials were thrown out with the bath water.
“Needless to say, as soon as July arrived, we entered a very different market, and some of this exuberance will have to unwind.”
She added that London remains “the dark horse of the property market”, claiming it’s much harder to predict where it will go over the rest of the year.
Meanwhile, Stuart Law, CEO at Assetz Capital, was not surprised by the surge in house prices, following the stamp duty holiday tapering off.
He added that while the market might see a slight cooldown in price growth rates as the stamp duty returns to normal, he does not expect this to last long.
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“The most significant factor we believe will support growth rates over the next 12-18 months is the slowdown in housing construction being experienced at present.
“Housebuilders across the country are facing a myriad of challenges — including difficulties accessing raw materials, labour shortages, increased transportation costs and the realities of post-Brexit trade — all of which are impacting their ability to deliver much-needed housing stock across the country.
“This slowdown in output, on top of the existing lack of appropriate housing stock on the market at present, will result in increased demand and could push house price growth beyond the record levels seen to date this year.
“This could potentially leave many first-time buyers and those planning to upsize in the near future out in the cold.”
Stuart highlighted that in order to stabilise house price growth and avoid such risks, SME housebuilders in particular must be provided with greater support to help them remain resilient in the current environment.
“Additional government support in the form of streamlined planning processes can't come soon enough, while ensuring adequate funding is available in a timely manner is also vital,” he added.
James Forrester, managing director at Barrows and Forrester, stated: “We now know that the initial stamp duty deadline at the end of June has failed to dampen this appetite and the market cliff edge that many predicted is now starting to look very unlikely.
“With buyer demand remaining extremely robust and stock shortages plaguing much of the market, it’s safe to say house prices will continue to climb throughout the remainder of the year.”
Iain McKenzie, CEO at The Guild of Property Professionals, shares the same view, claiming that all the elements are still in place for house prices to remain higher than usual for the foreseeable future, despite the winding down of the stamp duty holiday and more people feeling the pressure to return to the office.
“These figures paint an arresting picture of the frenzy we saw towards the end of the full stamp duty holiday as house prices boomed with buyers rushing to get their key in the lock,” he added.
“With demand for properties still ever-present and estate agents across the country facing a smaller pool of homes to sell, many prospective buyers will also be sitting on their deposit until the perfect home comes along — this factor will keep prices higher in the long term.”