Stamp duty holiday sparks September house price surge

Surge was led by England where average home price rose 4.9 per cent

Prices increased 1.2 per cent compared to October, adding almost £3,000 to the cost of a typical UK home. Getty Images

UK average house prices increased by 4.7 per cent on the year in September to hit a record high of £245,000 ($324,321), as Rishi Sunak’s stamp duty holiday ramped up demand, according to official data.

September’s House Price Index shows that house prices rose 1.7 per cent from August, when they recorded a 3-per-cent annual rise, with the average property in the UK now valued at £244,513.

Britain’s property market has seen a flurry of activity over the summer, after Mr Sunak introduced a stamp duty land tax break at the start of the July for residential properties worth up to £500,000.

The holiday, which expires on March 31, means that nine in 10 people buying their first home or moving up the property ladder will pay no stamp duty at all, with the measure delivering an average saving of £4,500, HM Treasury said.

The HPI is based on completed housing transactions, with a typical house purchase taking between six and eight weeks to reach completion, so September’s data will reflect “those agreements that occurred after the tax changes took place”, according to the Office for National Statistics.

The September surge in prices was led by England, which experienced a 4.9-per-cent increase with the average house price now at £262,000. In Wales, prices rose 3.8 per cent to £171,000, in Scotland they were up 4.3 per cent to £162,000 and Northern Ireland saw prices rise 2.4 per cent taking the average house price to £143,000.

Meanwhile, London's average house price hit a record high of £496,000, with an annual rise of 4.1 per cent.

Earlier this month, the Halifax House Price Index showed that British house prices rose at the fastest annual rate in October since June 2016, with the average home now selling for more than £250,000 ($326,261) for the first time, according to Halifax.

However, there were signs the market is slowing, with only a 0.3-per-cent rise in prices in October from the previous month, when house prices rose 1.5 per cent.

Asking prices for British houses edged down in November, according to property website Rightmove, as sellers sought to offload their properties ahead of the expiry of the tax holiday in March.

Prices fell 0.5 per cent in November from October, when they jumped by the most in more than four years, Rightmove said.

"Given the ongoing mini-boom, prices might have been expected to rise again this month," Tim Bannister, Rightmove’s director of property data, said.

"But instead we have a slight dip which could be a result of some new sellers pricing more realistically to have a better chance of agreeing a sale in time to benefit from the stamp duty savings on their onward purchase."