Annual house price inflation in the UK is now at its strongest level in almost seven years, the latest Halifax House Price Index has revealed.

House prices were 9.5% higher in May than they were 12 months ago, having also grown by 2.4% on a quarterly basis, and by 1.3% on a monthly basis.

The latest growth means the average UK house price now sits at a new record high of £261,743, Halifax stated.

Halifax managing director, Russell Galley, highlighted that the 1.3% growth in May means that the average property added more than £3,000 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,” Galley said.

The index also suggested that market activity continues to be boosted by the stamp duty holiday, with prospective buyers racing to complete purchases in time to benefit from the maximum tax break ahead of June’s deadline, before the tax holiday begins to be tapered down.

“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,” Galley added.

“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.

“These trends, coupled with growing confidence in a more rapid recovery in economic activity if restrictions continue to be eased, are likely to support house prices for some time to come, particularly given the continued shortage of properties for sale.”

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