Annual house price growth in the UK climbed to 10.9% during May, its highest level in almost seven years, the latest Nationwide House Piece Index has revealed.

House prices also saw a month-on-month rise of 1.8% in May, which followed a 2.3% rise in April.

The figures have taken the average price of a UK home to a new record £242,832, having risen by £23,930 over the past year.

Nationwide chief economist, Robert Gardner, said that the housing market has seen a “complete turnaround” over the past 12 months.

“A year ago, activity collapsed in the wake of the first lockdown with housing transactions falling to a record low of 42,000 in April 2020,” Gardner commented. “But activity surged towards the end of last year and into 2021, reaching a record high of 183,000 in March.

“While March’s spike in transactions was driven by the original end date of the stamp duty holiday, a lot of momentum has been maintained. Our research indicates that the extension to the stamp duty holiday is not the key factor, though it is clearly impacting the timing of transactions.

“Amongst homeowners surveyed at the end of April that were either moving home or considering a move, three quarters (68%) said this would have been the case even if the stamp duty holiday had not been extended.”

Gardner suggested that shifting housing preferences are instead continuing to drive activity across the market, with people reassessing their needs in the wake of the pandemic.

He added: “At the end of April, 25% of homeowners surveyed said they were either in the process of moving or considering a move as a result of the pandemic, only modestly below the 28% recorded in September last year.

“Given that only around 5% of the housing stock typically changes hands in a given year, it only requires a relatively small proportion of people to follow through on this to have a material impact.”

Commenting on Nationwide’s data, Quilter financial planner, Tracy Crookes, said that the statistics show there is “a seller’s market” at the moment.

“With house prices at their highest level in nearly seven years it is a hostile environment for first-time buyers who would have struggled to afford to buy even before the pandemic,” Crookes said.

“With prices now 10% higher, the dream of home ownership is even further out of reach. Nationwide has reported a marked uptick in the house price to earnings ratio, a key measure of affordability.

“We expect the strength of the property market to continue for the next few months at least, as a result of the extended stamp duty holiday and income support measures still available from the government. Once the stamp duty holiday begins tapering in June, along with the furlough scheme, we could see some of the momentum in the market begin to unwind.”

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