House prices accelerate faster than expected - ONS

UK house prices accelerated faster than expectations in September fuelled by the Chancellor's stamp duty holiday and households looking for more space, official figures showed.

The average price of a UK property rose 4.7% to £244,513 in the year to the end of September and by 1.7% during the month, the Office for National Statistics said. The average analyst forecast was for 2.9% annual growth.

The annual rate of increase speeded up from 3% in August. On a seasonally adjusted basis prices rose 1.7% from August to September.

The figures show Chancellor Rishi Sunak's stamp duty break feeding through to selling prices after indexes of agreed prices showed values rising to new records. Sunak has waived the tax on the first £500,000 of a property purchase causing a mini-boom as buyers have rushed to complete purchases before the deadline of 31 March.

Activity has also been fuelled by demand that built up when the housing market closed during the first coronavirus lockdown and households looking for bigger properties to accommodate home working.

Samuel Tombs, a UK specialist at Pantheon Macroeconomics, said: "The chancellor’s decision to raise the threshold for stamp duty in July has largely benefited sellers, not buyers. The official data have only just started to register the impact of the tax cut, as transactions usually lag agreed sales."

Some experts have warned the property market could move from boom to bust in 2021 as the stamp duty holiday ends and unemployment rises when government support for jobs ends.

James Forrester, managing director of estate agent Barrows & Forrester, said the strong market could continue for some time yet but that problems could be stored up.

Forrester said: "This continued price growth is being primarily driven by second- and third-rung buyers looking for larger homes in the wake of lockdown restrictions. A second national lockdown will only intensify this trend and as a result price growth should remain stable in the mid-term at the very least.

"Hopes of a vaccine will also breath new life into the market with any chance of a downturn looking slim at present. However, the end of the stamp duty holiday and the furlough scheme could still pose a danger with many predicting the market could fall off a cliff as demand dries up."