UK House Price Growth

U.K. house prices saw their biggest growth since 2016 in August, climbing to a record high, according to Britain’s longest-running barometer of the property market.

The Halifax House Price Index, which is run by analysis company IHS Markit, found that U.K. house prices grew by 5.2% in August compared to the same month last year. It marks the strongest annual growth in prices since the end of 2016.

The price of the average U.K. house hit £245,747 ($324,241) – the first time on record that prices have surpassed £245,000. It represents month-on-month growth of 1.6% from July to August, a touch higher than the 1.5% growth forecasted by economists in a Reuters poll.

Russell Galley, managing director at Halifax, said the surge in property market activity had driven up house prices as coronavirus lockdown measures eased in the summer months.

This had been “fuelled by the release of pent-up demand, a strong desire amongst some buyers to move to bigger properties, and of course the temporary cut to stamp duty,” he said in a statement.

July’s change to stamp duty on properties worth up to £500,000 has had an impact.

However, Galley said it was “highly unlikely that this level of price inflation will be sustained,” despite a boost from these positive factors in the short-term.

The U.K.’s macroeconomic picture should become clearer in the next few months, he added, as the government’s economic support measures wind up and the “true scale of the impact of the pandemic on the labour market becomes apparent.”

“Rising house prices contrast with the adverse impact of the pandemic on household earnings and with most economic commentators believing that unemployment will continue to rise, we do expect greater downward pressure on house prices in the medium-term,” Galley said.