UK House Price Inflation Unexpectedly Accelerates In August: Nationwide

ukhouseprices nov30 01sep21 lt

UK house prices rose at a faster annual pace in August and prices climbed at the second fastest pace in 15 years from the previous month, survey results from the Nationwide Building Society showed Wednesday.

The house price index rose 11.0 percent year-on-year following a 10.5 percent increase in July. Economists had expected the pace to slow to 8.6 percent.

Prices rose 2.1 percent from the previous month, when prices fell 0.6 percent. Economists had forecast a 0.2 percent increase.

The monthly increase was the fastest since a 2.3 percent rise in April.

House prices are now around 13 percent higher than when the Covid-19 pandemic began, Nationwide said.

"The bounce back in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market," Nationwide Chief Economist Robert Gardner said.

Recent strength could be due to the strong demand from those buying a property priced between GBP 125,000 and GBP 250,000, who are looking to take advantage of the stamp duty relief in place until the end of September, the economist pointed out.

That said, the maximum savings are substantially lower, GBP 2,500 versus a maximum saving of GBP 15,000 on a property valued at GBP 500,000 before the stamp duty relief in England tapered, he noted.

The price increase in August could also be driven by lack of supply, Gardner added.

Nationwide expects the underlying demand for properties to remain solid in the near term amid a recent rebound in consumer confidence and low borrowing costs combined with a lack of supply.

The outlook towards the end of the year remains uncertain.

Gardner pointed out that activity will almost inevitably soften for a period after the stamp duty holiday expires at the end of September and also due to a possible rise in unemployment as the government withdraws support schemes.

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