According to Halifax, the average cost of property hit an all-time high last month and shows no signs of falling.
In May, a typical home sold for more than £260,000, meaning that prices have risen by 9.5% compared to this time last year.
Based on the average cost of the property, that represents an increase of £22,000.
According to the bank, the frenetic rise in prices is driven by flocks of buyers emerging after lockdown with unexpected savings and fast-forwarding plans to buy.
In addition, many aspiring buyers are keen to take advantage of the stamp-duty holiday unfurled by Chancellor Rishi Sunak as part of economic recovery packages, said Halifax.
The stamp duty holiday temporarily suspends taxes (of between 3-5%) on properties worth up to £500,000 until June, after which there will be a phased return to the usual levy.
Combined with a shortage of homes for sale, this trifecta caused average property prices to rise by more than £3000 in the last month alone.
For some homebuyers, lockdown restrictions have resulted in an unexpected build-up of savings, which can now be deployed to fund bigger deposits for bigger properties, potentially pushing property prices even higher.
Whilst these effects will be temporary, the current strength in house prices also points to a deeper and long-lasting change as buyer preferences shift in anticipation of new, post-pandemic lifestyles – as greater demand for larger properties with more space might warrant an increased willingness to spend a higher proportion of income on housing.
Indeed, predominantly rural Wales topped the tables for inflation again, with annual price growth of nearly 12%, or £28,000.
Yorkshire and the Humber and the North West then followed suit, both reportedly showing double-digit inflation in average property prices.
However, the seller's market is not welcome news to everyone. Many rural communities face a so-called second homes crisis, as competition between wealthy buyers looking to escape the rat race pushes up house prices.
For example, in the Pembrokeshire village of Abersoch, 46% of properties are second homes. Rightmove places the average cost of a home at more than £500,000, despite average earnings in Wales being the third lowest in the UK.
Mabon ap Gwynfor, the Housing Spokesperson for Plaid Cymru and Welsh Senate member, spoke to Hiraeth Podcast about the issue this week:
It's the gentrification of communities where capital works against the wellbeing and the welfare of our communities and those living there. Those with capital, those with money can afford to buy second homes and price people out of their own communities. They are forcing- without realising it, more often than not- people on low incomes to move away from their communities," he said.
There's no control over the market, and without control, the market is rampant, and it will kill communities.
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