Home Lead Story Why have house prices risen so much?

Why have house prices risen so much?

by LLP Editor
11th May 21 11:23 am

House prices continued to soar in April, up 1.4% from March and 8.2% YTD to an average of £258,204, according to the latest Halifax index, with no sign of slowing down any time soon.

With that in mind, experts at Money.co.uk have offered their expertise answering some of the most important questions:

Why have house prices risen so much?

Here are a few reasons that could have led to a soar in house prices:

  1. The stamp duty holiday extension
  2. Low-interest rates
  3. The desire to move to a new house which has also been fuelled by the pandemic
  4. The desire to live out of a city, in a larger home for a similar price
  5. In lockdown, a lot of people were able to save money and are now in a position to buy a new home

What impact did the stamp duty have?

After Chancellor Rishi Sunak brought in a temporary holiday to stamp duty fees last summer, to give the housing market a boost, this led to a huge increase in UK house sales and has been a major factor in pushing people to act – even though the £15,000 saving has been more than swallowed up by house price increases since it was introduced.

What has happened to house prices in the past year?

House prices have been steadily rising for the past year, with only a small dip at the start of 2021 when the stamp duty holiday was expected to end.

There are several house price indices produced by different organisations. They use different factors when assessing house prices in the UK and therefore it’s worth looking at all of them to get the full picture on prices.

The following organisations can offer you an insight into house price indices: Halifax, Nationwide, The Land Registry and Zoopla.

Will house prices keep rising?

The data from Halifax today predicts that prices will continue to rise for the next few months but at some point this year will begin to slow down, at the point when the government’s furlough scheme comes to an end. However, the pandemic has shown us that nothing is ever set in stone and therefore the outlook remains cautious for the housing market.

“We expect the market to remain strong at least until the end of the year, with prices supported by a severe shortage of homes for sale and people wanting to make a move and get on with their lives as the pandemic finally recedes and life returns to normal.” – Mike Scott, chief analyst at estate agency Yopa.

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