UK house price rises sharply as stamp duty holiday ends

·3 min read
Two houses occupied by squatters are seen in the middle of a terrace (2nd and 3rd R) on Park Lane,  in London January 22, 2009.  A real estate agent at Mayfair's Harrods Estates said she estimated the value of the buildings at several million pounds, depending on the lease-hold. The squatters say they have created an arts centre.   REUTERS/Stephen Hird   (BRITAIN)
House prices have yet again headed higher in the UK, despite the end of a government tax cut. Photo: PA

UK house prices hit another all-time high in September, rising sharply as the stamp duty holiday taper ended. 

According to the Halifax monthly house price index, prices rose by 1.7% in September, adding more than £4,400 to the value of the average property. 

This rate of monthly growth was the strongest since February 2007, pushing year-on-year house price inflation up to 7.4%. 

This also reversed the recent three-month downward trend in annual growth, which had peaked at an annual rate of 9.6% in May. The price of an average house is now as expensive as it has ever been, standing at just over £267,500.

"While the end of the stamp duty holiday in England – and a desire amongst homebuyers to close deals at speed – may have played some part in these figures, it’s important to remember that most mortgages agreed in September would not have completed before the tax break expired," said Russell Galley, managing director at Halifax. 

"This shows that multiple factors have played a significant role in house price developments during the pandemic."

Galley adds that the race for space has had an impact on where and what people are buying, with houses with outdoor areas and near to green space winning out in terms of price rises over flats. 

Chart: Halifax
Chart: Halifax

Read more: UK mortgage approvals fall as stamp duty holiday frenzy ends

“Perhaps the biggest factor in determining the future of house prices remains the limited supply of available properties. With estate agents reporting a further reduction in the number of houses for sale, this is likely to underpin average prices – though not the recent rate of price growth – into next year," said Galley.

Halifax said that Wales continues to record the strongest house price inflation of any UK region or nation, with annual growth of 11.5% in September (average house price of £194,286). 

Watch: How much money do I need to buy a house?

Scotland also continues to outperform the UK national average, with growth of 8.3% (average house price of £188,525). In both nations, the equivalent stamp duty holidays came to an end at an earlier date.

The weakest performing regions in terms of annual house price inflation are all to be found in the South and East of England, though it should be highlighted that these are also the areas with the highest average house prices. Eastern England has seen annual growth of 7.2% (average house price of £310,664) while in the South East it’s 7% (average house price of £360,795).

Read more: What the end of the stamp duty holiday means for the housing market

Greater London remains the outlier, with annual growth of just 1% (average house price of £510,515), and was again the only region or nation to record a fall in house prices over the latest rolling three-monthly period (-0.1%)

Watch: House prices stage surprise surge despite stamp duty holiday drawing to a close

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