House prices have risen at the highest rate for seven years, as buyers look for bigger homes with gardens, according to Swindon-headquartered mortgage lender Nationwide.
According to the building society, the average UK house price has increased by 10.9 over the past year in a so-called Race for Space. The average house now costs £242,832, up £23,930 from this time last year.
Almost a third of buyers said they were moving to access a garden or outdoor space more easily. "Escaping the hustle and bustle of urban life" and "being closer to family" were other top reasons for moving, according to the survey.
House prices rose on average by 1.8 percent in May, after a 2.3 percent rise in April, according to figures from Nationwide.
Commenting on the figures, Robert Gardner, Nationwide's chief economist, said: "May saw a further acceleration in annual house price growth to 10.9 percent, the highest level recorded since August 2014.
"In month-on-month terms, house prices rose by 1.8 percent in May, after taking account of seasonal effects, following a 2.3 percent rise in April.
“The market has seen a complete turnaround over the past twelve months. A year ago, activity collapsed in the wake of the first lockdown with housing transactions falling to a record low of 42,000 in April 2020.
"But activity surged towards the end of last year and into 2021, reaching a record high of 183,000 in March.
"While March’s spike in transactions was driven by the original end date of the stamp duty holiday, a lot of momentum has been maintained. Our research indicates that the extension to the stamp duty holiday is not the key factor, though it is clearly impacting the timing of transactions."
Looking forward, Nationwide said the outlook was buoyant in the near term, but uncertain further out.
“Housing market activity is likely to remain fairly buoyant over the next six months as a result of the stamp duty extension and additional support for the labour market included in the Budget, especially given continued low borrowing costs, improving credit availability and with many people still motivated to move as a result of changing housing preferences in the wake of the pandemic, as highlighted above," said Robert Gardner.
“With the stock of homes on the market constrained, there is scope for annual house price growth to accelerate further in the coming months, especially given the low base for comparison in early summer last year.
“Further ahead, the outlook for the market is far more uncertain. If unemployment rises sharply towards the end of the year as most analysts expect, there is scope for activity to slow, perhaps sharply, though even this could potentially be offset by ongoing shifts in housing preferences, if current trends are maintained.”