House prices reach record high after annual growth of 9.5%
House prices in the UK increased by 9.5% over the year to May, in what Halifax described as the strongest level of inflation in nearly seven years.
The average property price is now at a record high of £261,743, according to its data – up 1.3% month-on-month.
Annual house price growth was strongest in Wales, with values soaring by 11.9%.
Managing director at Halifax, Russell Galley, said: "House prices reached another record high in May, with the average property adding more than £3,000 (1.3%) to its value in the last month alone.
"A year on from the first easing of national lockdown restrictions, and the gradual reopening of the housing market, annual growth surged to 9.5%, meaning the average UK home has increased in value by more than £22,000 over the past 12 months."
He said the stamp duty holiday has boosted activity.
Mr Galley continued: "For some homebuyers, lockdown restrictions have also resulted in an unexpected build-up of savings, which can now be deployed to fund bigger deposits for bigger properties, potentially pushing property prices even higher.
"Whilst these effects will be temporary, 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."
Mr Galley said all UK nations and regions except the north east of England witnessed an acceleration in annual house price inflation in May.
He said of annual house price growth: "For Wales and the North West, these are the biggest percentage gains since April 2005, and for Yorkshire and the Humber since June 2006.
"The south of England, traditionally the driving force of national house price performance, is for once lagging somewhat behind the rest of the country."
Chief executive of mortgage broker SPF Private Clients, Mark Harris, said: "House price growth in the south of England may be lagging behind the rest of the country but property prices are still more expensive there than elsewhere.
"While buyers are prepared to go further in the search for more space and less need to be in the office every day, pushing up demand for property away from the capital, it remains to be seen whether this is a long-term trend or whether the attraction of city centres will return at some point."
Average house prices and their annual increases to May 2021
East Midlands – £213,481 (+9.2%)
Eastern England – £302,158 (+6.5%)
London – £509,621 (+3.1%)
North East – £150,401 (+6.9%)
North West – £199,441 (+10.6%)
Northern Ireland – £160,641 (+9.1%)
Scotland – £183,351 (+7.4%)
South East – £351,437 (+6.1%)
South West – £266,182 (+8.6%)
Wales – £190,345 (+11.9%)
West Midlands – £220,998 (+9.0%)
Yorkshire and the Humber – £183,404 (+10.2%)
Erin Santillo and Vicky Shaw (PA)