U.K. House Prices Defy Ending of Tax Break for Buyers
U.K. house prices picked up momentum in August, with the tapering of a tax break on purchases doing little to dent demand for property, according to Halifax.
The average value of a home rose 0.7% to 262,954 pounds ($364,000), the mortgage lender said Tuesday. That followed a 0.4% gain in July. The annual pace of increase slowed marginally to 7.1%.
A stamp-duty holiday introduced last year began to be phased out on July 1, significantly reducing the maximum tax saving to buyers. But, according to Halifax, other factors are supporting the market. These include low borrowing costs, supply shortages, savings accumulated during lockdowns and pandemic-driven for larger homes away from big cities.
“We believe structural factors have driven record levels of buyer activity -– such as the demand for more space amid greater home working,” said Russell Galley, managing director at Halifax. “These trends look set to persist and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break comes to an end later this month.”
A similar picture emerged in the latest survey from Nationwide Building Society, which said house prices rose 2.1% in August –- the second-largest gain in 15 years.
The figures may partly reflect people looking to take advantage of stamp-duty relief before it ends altogether on Sept. 30.
Over the past year, the housing market in Wales outperformed other regions, with prices gaining 11.6%, Halifax said. The South West followed closely behind, reflecting demand for rural living. A 1.3% rise in London made the U.K. capital the worst-performing part of the country, and values declined slightly over the latest three months. At just over half a million pounds, London house prices remain almost double the national average, however.
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