The annual rate of UK house price growth soared to a 19-year high of 15.5% in July, official figures show, with a typical home having £39,000 added to its value in 12 months.
However, commentators pointed out that the annual rate of price growth had been pushed artificially high because in July 2021 prices dropped in response to the end to the most generous period of last year’s stamp duty holiday.
The Office for National Statistics (ONS), which issued the data, said the sudden doubling of the annual rate of price growth – from 7.8% in June to 15.5% in July – “was mainly because of a base effect from the falls in prices seen this time last year as a result of changes in the stamp duty holiday”.
Jonathan Hopper, the chief executive of the firm Garrington Property Finders, said the big jump was “first and foremost a statistical anomaly”.
The annual increases in England and Wales were even bigger, at 16.4% and 17.6% respectively, although these disguised wide regional variations: in south-west England, annual price growth hit 20.7% in July, whereas in London the figure was 9.2%.
Scotland and Northern Ireland were below the UK average at 9.9% and 9.6% respectively.
The stamp duty holiday meant that up until 30 June 2021, the first £500,000 spent on a property was tax-free for buyers in England and Northern Ireland. The tax break was then scaled back, with the threshold reduced to £250,000. It was returned to its pre-pandemic level of £125,000 on 1 October 2021.
The ONS said the 15.5% figure for July was the highest annual house price inflation rate the UK had seen since May 2003. It added that the average UK house price was £292,000 in July, “which is £39,000 higher than this time last year”.
Hopper said: “Those of a nervous disposition may want to look away from the official house price data in the coming months, as we’re set for a rollercoaster ride.”
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Sarah Coles, a senior personal finance analyst at the investment firm Hargreaves Lansdown, said the doubling of the rate of price growth was “not what it seems”, adding: “It doesn’t affect the outlook for the market, which is facing real challenges.”
The ONS said Northern Ireland remained the cheapest UK country in which to buy a property, with the average house price £169,000.
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