U.K. House Prices Surge Most in 17 Years as Lockdown Eases

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U.K. house prices surged at the strongest pace since 2004 this month as the country eased out of lockdown and buyers rushed to take advantage of an extended tax break on purchases.

Prices rose 2.1% in April after posting an unexpected decline the month before, Nationwide Building Society said Friday. They climbed 7.1% from a year ago to an average of 238,831 pounds ($334,000). Economists had expected an 0.5% monthly gain.

Britain’s property market bounced back from its enforced closure during the nation’s first lockdown last spring, bolstered by a temporary tax break and changes in work patterns that prompted buyers to seek more space outside of urban areas. The momentum was more uneven in early months of the year before Chancellor Rishi Sunak extended that incentive in the Treasury’s annual budget on March 3.

U.K. House Prices Surge Most in 17 Years as Lockdown Eases

What Our Economists Say ...

“The disconnect between Britain’s booming housing market and an economy floored by the pandemic is set to continue. The pandemic has also led to significant behavioral shifts. People are now re-evaluating their location as the proximity to the office becomes less of a priority and the demand for larger homes with outdoor space becomes more important. That will sustain demand later this year, albeit at a slower pace.”

--Niraj Shah, Bloomberg Economics. Click for the full REACT.

Now, many estate agents are predicting another strong year for the housing market with growing optimism about the economy as restrictions are eased and the roll out of vaccinations gains pace. Nationwide said a surge in household savings over the pandemic helped more people with deposits.

“While the stamp duty holiday is impacting the timing of housing transactions, for most people, it is not the key motivating factor,” said Nationwide’s Chief Economist Robert Gardner. “Housing market activity is likely to remain fairly buoyant over the next six months. Further ahead, the outlook for the market is far more uncertain.”

U.K. House Prices Surge Most in 17 Years as Lockdown Eases

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