LONDON: British house prices jumped by 2.1% in April, their biggest monthly rise in more than 17 years, after finance minister Rishi Sunak unexpectedly extended a tax break on property sales, figures from mortgage lender Nationwide showed on Friday.
House prices are 7.1% above their level a year earlier and close to December’s growth rate of 7.3%, which was the highest in nearly six years after COVID lockdowns boosted demand for more spacious housing.
“Just as expectations of the end of the stamp duty holiday led to a slowdown in house price growth in March, so the extension of the stamp duty holiday in the Budget prompted a reacceleration in April,” Nationwide chief economist Robert Gardner said.
Stamp duty, the main tax on property purchases, will not be payable on house purchases up to 500,000 pounds ($696,650) made before the end of June, and the first 250,000 pounds of property purchases will be tax-free until the end of September.
The tax break had been due to expire at the end of March.
As well as a rise in property prices, the tax exemption contributed to a sharp increase in the number of property sales last year.
Nationwide said there was scope for house prices to rise further in the coming months due to a fairly fixed supply of housing and a continued desire to move as a result of the COVID pandemic, which reduced demand for small city-centre homes.
But Gardner said activity could slow later this year, perhaps sharply, if unemployment picked up as most economists predict.