UK house prices jump 2.5% in August as Rishi Sunak's tax holiday takes hold

UK average house prices rose 2.5 per cent over the year to August, up from a 2.1 per cent rise in July, as the market realised the benefits of UK finance minister Rishi Sunak’s Stamp Duty Land Tax (SDLT) holiday.

The average house price was £239,000 ($311,646) in August, £6,000 higher than in the same month last year, HM Land Registry's House Index Price Index showed on Wednesday. Meanwhile, residential property transactions rose 21.3 per cent in September following the introduction of stamp duty break in July. This followed a 15.6 per cent rise in August, as more people decided to buy a new home or move house.

“With a third of Brits planning to spend savings from the tax break on home improvements and renovations, the temporary stamp duty cut is boosting business and protecting jobs,” said Mr Sunak.

“This ranges from carpenters to cleaners, brickies and decorators, they can all benefit from each sale.”

The government’s SDLT holiday for residential properties worth up to £500,000 expires on March 31. The holiday 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.

Meanwhile, the August growth in house prices was strongest in England where prices increased by 2.8 per cent, with the highest rate of 3.6 per cent in the East Midlands and the lowest of 0.2 per cent in the North East.

“Over the past three years, there has been a general slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England,” said the Office for National Statistics.

“The beginning of 2020 saw a pick up in annual growth in the housing market before the coronavirus restrictions were put in place at the end of March 2020."

London’s house prices increased by 3.5 per cent over the year to August and remained the most expensive at an average of £489,000, a record price last seen in July 2017.

Mortgage approvals for house purchases, which give an indicator of future lending, increased sharply in August to 84,700, the highest since October 2007, according to the Bank of England's Money and Credit August 2020 report, further reflecting the number of buyers looking to cash in on the tax break.