According to e.surv, the average price of a house in England and Wales now stands at £339,160 - up by 0.7% on the month and 9.8% on the year.
This is the highest annual rate for over 6 years, giving a real sense of how the housing market is significantly outperforming the wider economy.
The major drivers for the current rise in house prices are the pent-up demand developed in late 2019, along with weaker prices, the historically low-interest rates which have made homes more affordable, the savings accumulated in lockdown, the lifestyle changes associated with a move to more spacious premises and of course the temporary stamp duty holiday. In addition, in London in particular, the weaker pound has been a further factor in stimulating activity in the more exclusive markets even though it hasn’t made a notable impact on the index at this stage.
Richard Sexton, director at e.surv, comments: “This month’s Index shows that in the last year, England and Wales have seen the average price of a home increase by some £30,000. On an annual basis, this is the highest rate of increase for over 6 years.
"It is a very clear statement about the resilience of the housing market and how well it has responded to the challenges of the pandemic and the fiscal remedies that have been administered in the last year. This level of sustained price growth underlines how well the property market continues to perform in comparison to other areas of the economy.
“To understand why this is happening, we need to look at a combination of monetary, fiscal, public health and political responses of recent times. Demand has been injected into a market of historically low-interest rates that have supported buyers’ affordability since 2008. Lockdowns have fuelled people’s willingness to make lifestyle and life-stage changes and the injection of fiscal support, in the form of the temporary stamp duty holiday, has further supported their ability and desire to move home. We now also have the return of higher Loan-To-Value lending which many believe will, in the coming months, offer more welcome support to the market.
“We should be cautious when it comes to London’s lower growth rate. The capital’s market is evolving but the weaker pound has stimulated activity in the more exclusive markets in London though this hasn’t made a notable impact on the index at this stage. London remains a safe haven for many international buyers and their families. The weak pound helped transactions in ultra-high-net-worth markets in the capital rise last year.”
