The average UK house price reached a fresh record high in August while annual inflation cooled to a five-month low, after the partial end of the stamp duty holiday in England and Northern Ireland. Halifax, one of the country’s biggest mortgage lenders, said the average cost of a property increased by 0.7%, or £1,789, to £262,954, topping the previous peak of £261,642 recorded in May. The annual rate of house price inflation slowed to 7.1%, the lowest since March and down from 7.6% in July. However, compared with June 2020, when the housing market began to reopen after the first Covid-19 lockdown, prices remain more than £23,600, or 9.9%, higher. Greater London continues to lag behind the rest of the country, registering a 1.3% annual rise in prices in August, the smallest in 18 months. Over the latest three months, it was the only region or nation to record a fall in prices, of 0.3%. However, at £508,503, typical properties in the capital remain far above the national average price. Commentators believe much of the impact from the stamp duty holiday has now left the market, as highlighted by the drop in industry transaction numbers compared with a year ago. However, while such government schemes have provided vital stimulus, there have also been other significant drivers of house price inflation. Structural factors have also driven record levels of buyer activity, such as the demand for more space amid greater home working. There is also a limited supply of properties for sale. These trends look set to persist and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break comes to an end later this month. Moreover, the macroeconomic environment is becoming increasingly positive, with job vacancies at a record high and consumer confidence returning to pre-pandemic levels.

Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This newsletter is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as of September 2021 and the contents of the Finance Bill. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.