UK home prices hit new peak in buying frenzy on tax break, low interest rates

Average home cost rises 2.1% in April as sales show buyers' urge to move out of cities following Covid-19

London

UK house prices surged to a record this month with a tax break on purchases and rock-bottom interest rates prompting a "buying frenzy", the property website Rightmove said.

The average cost of a home rose 2.1 per cent to £327,797 (S$605,613) in April, marking only the second time in the past five years it rose that much in a single month.

Almost a quarter of sales were for properties on the market less than a week, with larger homes outside London snapped up quickest.

The figures reflect an urge by consumers to move outside cities following three national lockdowns to control the coronavirus in the past year.

Buyers are also taking advantage of borrowing costs near a record low and aid from the Treasury in the form of a holiday on stamp duty and support for borrowers with small deposits.

"It's a big jump, especially bearing in mind that the lockdown restrictions are still limiting the population's movements," Tim Bannister, Rightmove's director of property data, said in a statement released on Monday. "The stars have aligned for a spring price surge."

A separate survey showed strength in London's luxury housing market. The number of transactions in the capital surged as buyers snapped up the opportunity to take the tax break, data from research company LonRes showed.

The first three months of the year had the highest number of sales for a first quarter since 2016, when investors rushed to buy before a tax increase.

Buyers in London's most expensive areas could also take advantage of sliding prices, with city-centre homes seeing particularly heavy discounts at 2.8 per cent compared to last year.

For Rightmove, a lack of properties coming to market in the past few months helped buoy prices.

The average number of days to sell dropped to its lowest partly because inventories were so limited. Rightmove's website traffic hit a record of 9.3 million visits on April 7.

"This is the biggest lack of stock we've seen on the market for at least the past 20 years," said Richard Freshwater, an estate agent and director at Cheffins.

"The dreary five-day-a-week commute for many is now over, and this has led to areas outside of London becoming some of the most in demand."

Activity is likely to remain "robust" for the rest of 2021 although "some of the froth is likely to come off this spring surge" as some of the government support for individuals and businesses unwinds, Rightmove said. BLOOMBERG

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