House prices soar in Wales and the North West

The average UK property price has reached a record high of £261,743 with Wales the strongest performing region according to Halifax's house price index for May.

Annual growth surged to 9.5 per cent, meaning the average UK home has increased in value by more than £22,000 over the last 12 months.

Halifax managing director Russell Galley said the market was continuing to be buoyed by the current stamp duty holiday with prospective buyers racing to complete before June's deadline.

"The current strength in house prices also points to a deeper and long-lasting change as buyer preferences shift in anticipation of new, post-pandemic lifestyles - as greater demand for larger properties with more space might warrant an increased willingness to spend a higher proportion of income on housing," he said.

Wales saw an 11.9 per cent rise in prices over the past year, closely followed by the North West and Yorkshire and Humber, both of which posted double-digit annual growth. Wales and the North West saw the biggest percentage gains since April 2005 and Yorkshire and Humber experienced the highest rises since June 2006. The North East was the only region not to see an acceleration in house prices last month.

"These trends, coupled with growing confidence in a more rapid recovery in economic activity if restrictions continue to be eased, are likely to support house prices for some time to come, particularly given the continued shortage of properties for sale," said Mr Galley.

However, the South of England showed muted house price rises with greater London revealing a 3.1 per cent year-on-year increase.

"This likely reflects a weakness in city prices given the shift in preference for properties with more space, whilst recent surcharges on stamp duty for non-UK residents and Brexit concerns will also have weighed on the capital's market."

Mr Galley added that London had experienced a phenomenal house price rise following the global financial crisis which was not felt to the same extent by other regions.

Buyers look for more space

The National Federation of Builders head of housing and planning Rico Wojtulewicz said: "There has been more interest in houses than flats over the last four to five months and this isn't purely down to the stamp duty holiday but to effects of the pandemic. A lot of people with high salaries and equity in their flats in London want to move out for more space."

Mr Wojtulewicz said this was something builders should think about when designing their next projects. He said intense competition for £200,000 houses in Wales or the North West was more likely to happen as there was more room for manoeuvre than for an expensive property in London.

Bank of England figures show the number of mortgages approved to finance house purchases rose in May 2021 by 4 per cent to 86,921. Year-on-year, the April figure was 439 per cent above April 2020 which was during the first lockdown period.

HMRC latest quarterly transactions, February to April were 24 per cent higher than the preceding three months and year-on-year were 179.6 per cent higher than in April 2020.

The Royal Institution of Chartered Surveyors residential market survey for April showed buyer demand remained high across the market, while new instructions lost impetus.

Brokers Hank Zarihs Associates said property development lenders were keen to extend finance for projects in major cities across the UK.