The UK property prices hit a record-high in Fall 2021

An average UK house now costs £267k – an all-time record-high level, data by Halifax reveals.

The Stamp Duty Holiday ended on 1 October, meaning the previous stamp duty rates take place now.

Partly because of the rush, property prices in the UK increased by 1.7%, or £4,425 in September 2021. It was also a record figure since 2007.

How did the events unfold?

In June 2020, right before the Stamp Duty Holiday introduction, the average UK property was worth £239k. Thus a new buyer had to pay £2,300 in stamp duty tax.

The tax relief was introduced in July 2021, exempting buyers from the stamp duty tax on properties worth under £500k. The threshold was lowered to £250k between July 2021 and September 2021 – the tapering period of the tax relief.

But in September 2021, the average UK property price stood at £267k, £28,000 higher than before the tax relief. It is 12 times more than the initial stamp duty saving of £2,300. 

Moreover, now a new buyer needs to pay almost £3,400 bill for the same property since the average price of £267k means a higher Stamp Duty Tax bracket (5% between £250k and £925k).

How did the nations and regions perform?

Across the UK, Wales ranked first place with an annual property price growth standing at 11.5% in September 2021. The average house there is worth £194k. In Scotland, there was an 8.3% annual growth rate; and the average property price stands at £188k. However, both Wales and Scotland saw the stamp duty holiday ending earlier.

In the South-West, there was a 9.7% property price annual growth. The average cost of buying a property stands at £276k there. East and South-East, areas with the highest average property prices, saw annual growth of some 7%.

As for Greater London, annual property prices lag behind the rest of the UK market with a 1% growth rate. On average, property in London costs £510k.

What do the experts say?

Russell Galley at Halifax highlights the strongest monthly rate growth of UK house prices in September 2021. The rush before the Stamp Duty Holiday end might have had its impact but more factors also played a key role in the rising property prices.

He points out the «race-for-space» since people’s priorities and lifestyles have changed. During the past year, flats became 6.1% (some £6,600) more expensive, while semi-detached and detached homes increased by almost 9% (around £41,000) in price. The demand might ease in the following month because of the rising costs of living and taxes. However, remaining low borrowing costs and improving labour conditions might provide support.

Galley also highlights the current shortage of housing in the market. It might underpin the average property prices in the next year.

Anna Clare Harper of SPI Capital thinks of September’s property prices strong performance as the reflection of the rush before the stamp duty holiday final end. However, there are two things to note. 

Firstly, she says the performance was particularly strong for homeowners-suitable properties; and spacious suburban homes with gardens increased in price most of all.

Secondly, the stamp duty holiday supported the high confidence in the property market but compromised the affordability.

She points out the remaining cheap financial offers and favourable mortgages resulting in stretched affordability. But ambitious property buyers have to note that «both capital and interest repayments must be repaid». The property price growth might continue to rise in the following month but slow down when we «settle into the new normal».