Property prices rose 1.8% in May to reach a new record average price of £242,832, according to Nationwide.
The building society said prices are up £23,930 over the past 12 months alone, an annual growth rate of 10.9% and the highest recorded in seven years.
The market has seen a complete turnaround over the past twelve months. A year ago, activity collapsed in the wake of the first lockdown with housing transactions falling to a record low of 42,000 in April 2020. But activity surged towards the end of last year and into 2021, reaching a record high of 183,000 in March.
While March’s spike in transactions was driven by the original end date of the stamp duty holiday, a lot of momentum has been maintained. Research indicates that the extension to the stamp duty holiday is not the key factor, though it is clearly impacting the timing of transactions.
Amongst homeowners surveyed at the end of April that were either moving home or considering a move, more than two thirds (68%) said this would have been the case even if the stamp duty holiday had not been extended. It is shifting housing preferences which is continuing to drive activity, with people reassessing their needs in the wake of the pandemic.
The frenzy to snap up a property at the tail end of a pandemic is showing no signs of stopping, with double digit growth in house prices throughout May – the highest we have seen in the best part of a decade.
It is still crucial that prospective buyers go into the process with a sound understanding of the market and what they want from a new property.
As demand in the market increases, the extra competition creates a fear of missing out that can distract buyers from the fundamentals. It’s important not to let the current property frenzy draw attention away from what you are really looking for.