UK house prices rise by most since 2014

British house prices in May were 9.5% higher than a year earlier, their biggest annual increase since June 2014, adding to signs of a boom in the property market, figures from mortgage lender Halifax showed on Monday.

Britain’s housing market has seen a sharp rise in sales and prices over the past year, thanks to a government tax incentive for movers and a jump in demand for more spacious properties from richer households able to work from home.

“Heading into the traditionally busy summer period, market activity continues to be boosted by the government’s stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline,” Halifax managing director Russell Galley said.

House prices in May were 1.3% higher than in April, when they rose by 1.5%. Economists polled by Reuters had on average forecast a 1.2% monthly increase and a 10.0% annual rise.

Other measures of house prices have also shown big increases. Britain’s official house price index showed that house prices based on transactions completed in March were 10.2% higher than a year before, the biggest rise since August 2007.

Halifax said it expected upward pressure on house prices would outlive the stamp duty reduction, which will be phased out between July and October.

“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,” Galley said.

“Greater demand for larger properties with more space might warrant an increased willingness to spend a higher proportion of income on housing,” he added.