The Nationwide Building Society has reported that the price of a typical UK home increased by 0.8% in March.
Meanwhile, the annual rate of house price growth rose to 5.7%, the strongest pace since February 2015 up from 4.8% the previous month.
The average price of a home is now £200,251.
Robert Gardner, Nationwide’s chief economist, said: “There has been a pickup in housing market activity in recent months, with the number of housing transactions and mortgage approvals rising strongly. This is likely to have been driven, at least in part, by upcoming changes to stamp duty on second homes, where buyers have brought forward purchases in order to avoid the additional tax liabilities.
“This temporary boost to demand against a backdrop of continued constrained supply is likely to have exerted upward pressure on prices and helped to lift the pace of annual price growth out of the fairly narrow range of 3%-5% that has been prevailing since the summer.
“The pace of house price growth may moderate again once the stamp duty changes take effect in April. However, it is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will keep the demand/supply balance tilted in favour of sellers and maintain pressure on price growth in the quarters ahead.
“Indeed, according to Royal Institute of Chartered Surveyors, the stock of houses on estate agents’ books remains close to all time lows on data extending back 30 years.
“Regional house prices maintained the same broad trends prevailing in recent years with southern regions continuing to record significantly stronger rates of annual price growth, further widening regional disparities.
“One slight variation on this familiar theme was that, for only the fourth time in five years, London did not record the strongest rate of price growth, with the Outer Metropolitan region occupying the top spot in Q1.
“Nevertheless, London still recorded the second fastest rate of growth, with prices reaching a new all-time high some 52% above pre-crisis levels (compared with 9% for overall UK house prices).
“Overall, the pace of house price growth generally moderates as you move from the south to the north of the country, with the North of England and Scotland actually recording modest house price declines in Q1, even though prices remain well below pre-crisis levels in those regions.”
Adrian Whittaker, sales director at New Street Mortgages, said: “These latest figures from Nationwide highlight continued growth in house prices across the UK, and today’s rise in stamp duty certainly looks to have encouraged demand for property from buy to let investors in the first quarter of the year. However, even without this stimulus, the market continues to be characterised by demand outstripping supply and, in this competitive environment, buyers are demanding faster mortgage applications to get ahead in this race to buy property.
“To meet this need, lenders are adopting the latest in financial technology to empower brokers and streamline processes. Firms that fail to keep up with this digitisation will soon find their markets disrupted by those that have embraced ‘FinTech’ to deliver ever faster offers and completions.”
