Average house prices across the UK increased by 2.5% over the year to August 2020, a figure up from 2.1% in July, according to the latest UK House Price Index.

The Land Registry revealed that average house prices saw rises over the year of 2.8% in England to £256,000, 2.7% in Wales to £173,000, 0.6% in Scotland to £155,000 and 3.0% in Northern Ireland to £141,000.

The August data, which saw the average price of a house climb to £239,196, was the first full month of transactions to follow the government’s announcement of the stamp duty holiday on 8 July.

Hargreaves Lansdown personal finance analyst, Sarah Coles, suggested the stamp duty holiday had “prolonged the mini-boom” but added that the housing market risks becoming “a victim of its own success”.
 
“The short-term stamp duty holiday means buyers are hurrying to beat the March deadline, and demand is booming,” Coles commented. “This is inflating prices in the near-term, because it’s a sellers’ market, and buyers can spend the extra cash they would otherwise have put aside for tax.
 
“Mortgage companies are cashing in on the boom by pushing interest rates up across the range of products, and adding higher fees. There may also be extra costs caused by delays in the buying and selling process. The boom in demand has overwhelmed the system, so this is taking far longer. The more delays there are, the higher the risk of failure, and when chains start to break, buyers risk losing thousands of pounds in failed purchases.”

Yes Homebuyers founder and managing director, Matthew Cooper, added: “We’re now seeing huge delays at the legal stage of the selling process as those operating within this segment of the market have become overwhelmed and are ill-equipped to service such demand levels.

“As a result, thousands of homebuyers who thought they were due to save thousands in stamp duty, will now be left wondering if this will be the case. For many of them, it won’t and we could see a sharp decline in market health as many pull out of a sale, while others refrain altogether.”

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