U.K. House Prices Rise Most in Seven Months as Outlook Brightens

(Bloomberg) --

U.K. house prices rose at their fastest pace in seven months in April, buoyed by the extension of a tax cut on property purchases and a brightening economic outlook.

Values climbed 1.4% from March, when they increased 1.1%, mortgage lender Halifax said Monday. The rise, the most since September last year, left prices 8.2% higher than a year earlier at a record 258,204 pounds ($363,000). That’s the largest annual gain for five years.

The figures suggest the housing market is enjoying a revival after losing momentum around the start of the year following a stellar 2020. Nationwide Building Society said last month that house prices rose 2.1% in April, their fastest monthly pace for 17 years.

The pickup partly reflects people seeking to complete property deals before the end of June. Chancellor of Exchequer Rishi Sunak last month extended a stamp-duty holiday that saves buyers as much as 15,000 pounds.

But the fundamentals underpinning the housing market are also improving, with the economy set for a strong recovery as lockdown restrictions to fight the coronavirus pandemic are removed altogether over the next few weeks.

In an upbeat assessment last week, the Bank of England said economic output is likely to return to pre-pandemic levels by the end of 2021 and predicted unemployment would peak only slightly above its current rate, thanks to the government’s wage support program for furloughed employees.

“The stamp duty holiday continues to add impetus to an extremely active market, magnifying the current shortage of available homes as buyers aim to take advantage of the government scheme,”said Russell Galley, managing director at Halifax. “The influence of the stamp duty holiday will fade gradually over the coming months as it’s tapered out but low stock levels, low interest rates and continued demand is likely to continue to underpin prices in the market.”

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