The growth in house prices shows no sign of slowing following the biggest monthly rise since February 2004, as reported by Nationwide.
Nationwide's April house price index show that prices went up 2.1% month-on-month in April, meaning the average price is now £238,831 - which Nationwide says is a new record high.
Moreover, annual growth rebounded to 7.1% in April, from 5.7% in March, providing further encouragement for spring sellers, as homebuyers face the highest house prices Britain has seen. This could impact those looking to climb onto the property ladder as well as those looking to buy before renovating a house.
Robert Gardner, Nationwide's chief economist, said: “With the stock of homes on the market relatively constrained, there is scope for annual house price growth to accelerate further in the coming months, especially given the low base for comparison in early summer last year.
"Indeed, if house prices remain flat in month-on-month terms over the next two months, the annual rate of growth will reach double digits in June."
House Prices in 2021: What to Know
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At the turn of the year, experts generally predicted that house prices would tumble in 2021, due to the looming initial 31 March stamp duty holiday deadline and the economic impact of the pandemic.
The market has been resilient, however. While the Office for National Statistics (ONS) reported in March that house prices declined in January (by 0.5%) for the first time since April 2020, this still left prices 7.5% higher in January compared to a year previously.
And the recent measures announced in the Budget, including the new mortgage guarantee and stamp duty holiday extension, suggest that housing market activity is likely to remain buoyant over the next six months.
Many estate agents are now predicting healthy forecasts for the housing market. Rightmove revealed last month that the average asking price in the UK jumped to £327,797 in April, and the number of houses selling in a week reached its highest ever level, at 23% of sales.
However, there is expected to be a drop in sales and house prices when the stamp duty nil-rate band drops to £250,000 in September.
Our Requirements Have Changed
The pandemic has been a key driver of house prices, and spending more time indoors has changed the requirements of those looking to buy a home.
Two- and three-bedroom semi-detached houses are being snapped up the quickest, Rightmove says, with many families now searching for more spacious homes, following the shift to working from home.
Earlier this year, a Royal London survey of 1,000 current and pending UK home movers revealed that 38% were convinced them to move homes because of the pandemic.
Home movers said the main features that made lockdown harder were small garden/outdoor areas (33%), lack of indoor space (27%) and no outdoor space (24%).
Unsurprisingly, having more indoor space (51%) was the most-desired property features, followed by more outdoor space (46%), more natural lighting (34%), and more space for pets (28%).
Greater Demand for Rural Locations
The pandemic has also increased our desire for rural living, the Royal London survey showed, with many in major cities packing up their bags for the country.
When the home movers were asked which areas they wanted to move to, 57% of Belfast movers said they wanted to move into a rural area, followed by 53% in Cardiff, 46% in London, 45% in Manchester and 42% in Liverpool.
“Unsurprisingly, space is the most desirable feature for home movers who want more room both indoors and outdoors," said Mona Patel, consumer spokesperson at Royal London. "While cities have always been popular home buying locations, the pandemic has seen a shift in attitude as our research shows that there is a greater demand for rural locations.”
Uncertainty Over House Prices Remains
Despite the thriving market, some analysts continue to predict a a drop-off in demand in 2021, and therefore a drop in house prices.
Robert Gardner said in April: “Further ahead, the outlook for the market is far more uncertain. If unemployment rises sharply towards the end of the year as most analysts expect, there is scope for activity to slow, perhaps sharply."
Prior to the Budget, it was expected that around 2.6m people could be unemployed by the middle of the year had the furlough scheme have ended in April. But in the Budget the government confirmed that the scheme will now be extended until September.
This should taper the impact on house prices, but the predicted economic downturn this year is expected to drive prices down.
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