UK house prices grow at fastest rate in 16 years

House prices in Britain rose by an annual rate of 13.4 per cent in June 2021, the highest since 2004.

LONDON, ENGLAND - AUGUST 07: Rows of houses on August 05, 2020 in London, England. The UK's housing market has slowly reopened after months of pandemic-related restrictions that largely halted the showing and selling of homes. (Photo by Dan Kitwood/Getty Images)

House prices in Britain rose by 13.4 per cent in June 2021 compared to the same month last year – the highest annual growth rate since November 2004.

New figures from mortgage lender Nationwide revealed that all regions of the UK recorded significant growth in the second quarter of the year, with Northern Ireland registering the biggest rise (14 per cent). The smallest increase occurred in Scotland (7.1 per cent).

The price boom can be partially attributed to a lower baseline last year, when the housing market was weakened by the Covid-19 lockdown. The stamp duty holiday in England, Wales and Northern Ireland has also stimulated the market and encouraged buyers.

While Nationwide says mortgages remain affordable, saving enough money for a deposit is becoming increasingly difficult. Robert Gardner, Nationwide’s chief economist, said: “A potential buyer earning the average wage and saving 15 per cent of take-home pay would now take five years to raise a 10 per cent deposit.”

While the combination of higher demand and a lack of supply is likely to put more upwards pressure on house prices in the coming months, the end of the stamp duty holiday and predicted rises in unemployment may dampen housing market activity.