UK house prices defy ending of tax break for buyers

London

UK house prices picked up momentum in August, with the tapering of a tax break on purchases doing little to dent demand for property, according to Halifax.

The average value of a home rose 0.7 per cent to £262,954 (S$488,277), the mortgage lender said on Tuesday. That followed a 0.4 per cent gain in July. The annual pace of increase slowed marginally to 7.1 per cent.

A stamp-duty holiday introduced last year began to be phased out on July 1, significantly reducing the maximum tax saving to buyers. But, according to Halifax, other factors are supporting the market. These include low borrowing costs, supply shortages, savings accumulated during lockdowns and pandemic-driven for larger homes away from big cities.

"We believe structural factors have driven record levels of buyer activity - such as the demand for more space amid greater home working," said Russell Galley, managing director at Halifax. "These trends look set to persist, and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break comes to an end later this month."

A similar picture emerged in the latest survey from Nationwide Building Society, which said house prices rose 2.1 per cent in August - the second-largest gain in 15 years.

The figures may partly reflect people looking to take advantage of stamp-duty relief before it ends altogether on Sept 30.

Over the past year, the housing market in Wales outperformed other regions, with prices gaining 11.6 per cent, Halifax said. The South West followed closely behind, reflecting demand for rural living. BLOOMBERG