UK house prices increased at the fastest pace since 2004 after the extension of the stamp duty holiday, data published by the Nationwide Building Society showed on Friday.
House prices grew 2.1 percent month-on-month in April, the biggest monthly rise since February 2004. Economists had forecast an increase of 0.5 percent after posting a 0.3 percent drop in March.
Average house prices reached a new record high of GBP 238,831 in April.
On a yearly basis, house prices inflation rose to 7.1 percent from 5.7 percent in March. The rate was expected to slow to 5 percent in April.
Nationwide said annual growth will reach double digits in June if prices are flat over next two months.
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 labor market included in the Budget, Robert Gardner, Nationwide’s chief economist, said.
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, Gardner added.
Gardner said shifts in housing preferences may continue to support activity, even if labor market conditions weaken.