New data from IHS Markit and the Halifax building society, part of Lloyds Bank (LLOY), showed the UK housing market to be in rude health in August with prices up more than 5% on the same month a year ago to a new high.

A surge in demand for housing, spurred by the chancellor’s decision to waive stamp duty on purchases up to £500,000, drove the average house price up 1.6% on a monthly basis and 5.2% on an annual basis, tipping over £245,000 for the first time.

The rise in prices has defied many expectations given the 20% collapse in UK GDP in the second quarter and the deteriorating outlook for employment.

The Halifax data follows equally strong figures from the Nationwide building society which recorded a 3.7% annual increase in prices last month, reversing losses in May and June and setting a new all-time high.

According to government figures, the number of housing transactions has recovered sharply since June with sales in July up 14.5% on the month to more than 70,000, while Bank of England figures show a 66% jump in mortgage applications in July compared with the previous month.

The news lifted shares in selected house builders, with Barratt Developments (BDEV) adding 3.5% to 519p, Bellway (BWY) climbing 3% to £24.33 and Persimmon (PSN) rising 2.5% to £25.66

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Issue Date: 07 Sep 2020