UK house prices rise at fastest pace since 2004 - Nationwide

UK house prices rose at their fastest rate since 2004 in June as buyers competed fiercely in a market rebounding from Covid-19 lockdowns, Nationwide said.

The average price of a property in the UK rose 13.4% in June from a year earlier to a record £242,709, Britain's biggest building society said. In the quarter to the end of June prices rose 10.3%, up from 6.3% in the first quarter of 2021.

June's rate of growth was boosted by the shutdown of the property market a year earlier during the first Covid-19 lockdown but prices also rose sharply because of a buying frenzy.

Households are rethinking their property needs in light of the crisis, heading for the suburbs and coastal towns for more space and cheaper prices. The market has also been charged up by Chancellor Rishi Sunak's stamp duty holiday, whose full effect ends on 30 June with some benefits lasting until October.

David Westgate, chief executive of property consultants Andrews Property, said: "It's starting to feel like prices are freewheeling with buyers snapping up properties, particularly those with generous outside space, as soon as they come on to the market. The end of the full stamp duty holiday tomorrow may see activity cool a little but not significantly, as there are plenty of buyers who still have time and the motivation to complete before the tapered relief ends on 30 September."

Prices rose in all parts of the UK, led by Northern Ireland where houses sold for 14% more than a year earlier. Wales was the next strongest region. In Scotland, where the stamp duty holiday ended in March, prices rose at an annual rate of 7.1% - the weakest in the UK.

In 2004, when prices were rising at a similar rate, the housing market was recovering from the Iraq war and heading for the financial crisis that caused Northern Rock to implode.

Nationwide's chief economist, Robert Gardner, said demand was likely to remain solid for a while with prices likely to rise further as the economy rebounds amid rising consumer confidence and low interest rates. But he said the outlook was hard to predict with the government set to reduce support for households and businesses but with many people still looking for more space.

"Underlying demand is likely to soften around the turn of the year if unemployment rises as most analysts expect, as government support schemes wind down," Gardner said. "But even this is far from assured. Even if the labour market does weaken, there is also scope for shifts in housing preferences as a result of the pandemic to continue to support activity for some time yet."