Jamie Durham, economist at PwC, comments on the latest UK house price data:
“UK house prices continued to perform strongly in May 2021, with prices increasing by 10.0% year on year.
“London continues to be the region with the slowest growth, with prices up 5.2% in the last year, reflecting the affordability challenge with the average property in the capital costing nearly twice as much as the UK average.
“Stamp duty is not the only factor pushing prices up. The market continues to be supported by a shift in preferences towards more spacious properties. While the price of an average detached house increased 11.3% over the last year, flats only increased by 6.5%. The market has also been supported by household savings during the pandemic, estimated to be around £7,800 per adult, and continued low interest rates.
“We expect that these forces will support price growth over the coming months, though at a lower rate that we have seen in the first half of 2021. Our latest modelling suggests prices could increase by 5-7% on average this year, which is significantly above recent years, and could rise by up to 4% next year.
“There is, however, some limited risk to the outlook if inflation continues to rise and the Bank of England is forced to increase interest rates, which would likely weigh on UK house price growth.”
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