MNI BRIEF: UK Aug House Price Surge Despite Sales Tax Taper​​

UK house prices surged in August, recording the second-highest month-on-month gain in 15 years and now stand 'around 13% higher' than when the pandemic started, the Nationwide Building Society said Wednesday. The move higher took many by surprise, including Robert Gardner, the Nationwide's chief economist, who said the tapering of stamp duty relief in June 'had been expected to take some of the heat out of the market.'

Trying to assess why prices rose 2.1% m/m and 11% y/y, Gardner said a lack of supply was likely to be a key factor behind August's price increase, 'with estate agents reporting low numbers of properties on their books.' The only other time in the last decade-and-a-half that prices rose at a faster pace was April 2021's 2.3%.

Rising house prices have been a concern for some officials. Former BOE MPC member David Miles told MNI recently that house prices were beginning to look vulnerable at current levels.( MNI INTERVIEW2: UK House Prices Vulnerable - Ex-BOE MPC Miles Aug 4)