House prices are rebounding from a post-April decline caused by Chancellor Rachel Reeves’ hike to stamp duty, official data has shown.
The official house price index rose by 3.7 per cent in the year to June, according to the Office for National Statistics (ONS), which was higher than 2.7 per cent growth seen in May.
It put the average UK house price at £269,000, with England seeing higher prices of £291,000.
Over July, there was a 0.9 per cent increase in house prices, the second consecutive monthly rise.
Monthly private rents increased by 5.9 per cent over 12 months, which is slightly below 6.7 per cent growth seen for June.
ONS head of housing market indices Aimee North said: “Annual private rents inflation has slowed across the whole of the UK for the seventh consecutive month.”
Fresh data points to a quick recovery in the housing market after April saw a 2.4 per cent month-to-month drop, which could build momentum for the coming months.
Zero rate thresholds for stamp duty dropped from £250,000 to £125,000, with home buyers paying between £250,000 and £925,000 now having to pay a five per cent levy on property bought.
First-time buyers get a relief on property value worth up to £300,000.
House prices turn a corner on ‘volatility’
Paige Tao, an economist at PwC UK, said the housing market was gradually recovering from the “volatility” brought by higher stamp duty charges while Pantheon Macroeconomics’ Elliott Jordan-Doak said demand was left “broadly unscathed” by extra taxes.
Zoopla executive director Richard Donnell said greater access to mortgages was allowing Brits to get on the housing ladder, with low increases in house prices likely to be a positive for affordability.
“Rental growth is slowing and is set to move lower over the rest of the year as affordability acts as a growing brake on rental growth,” Donnell said.
“House prices inflation is volatile on the ONS measure but remains below the growth in average earnings which is helping to slowly improve affordability.”
Economists have suggested further volatility is coming amid rumours that the Chancellor is set to make sweeping reforms to property taxes.
The Treasury is considering the introduction of capital gains taxes on the sale of houses above £1.5bn, The Times reported, while the full replacement of the stamp duty with a new tax is also reportedly on the cards.
Simon Gerrard, chair of Martyn Gerrard Estate Agents, warned that efforts to raise revenue would lead to “punishingly high” taxes.