Property prices are rising at their fastest rate since early 2015, with market momentum driven by the stamp duty holiday announced by the Chancellor in July this year.

House prices are surging at their fastest rate for almost six years in a “Rishi rally” as buyers scramble to cash in on the Government’s stamp duty holiday.

The average cost of a home in the UK rose 6.5 per cent in the year to November an acceleration in market momentum from the 5.8 per cent annual increase recorded in October, according to latest figures from leading mortgage lender Nationwide.

Prices have not risen faster since January 2015.

The average cost of a home now stands at an all time high of £229,721, an increase of 0.9 per cent during the month — despite the lockdown — and 3.7 per cent over the quarter.

Buyers in England are currently able to save up to £15,000 on their purchases after the Chancellor waived stamp duty on the first £500,000 of any purchase until the end of March next year.

The move has injected momentum into the market on a scale not seen since before the Brexit referendum. There has been particularly strong demand for family homes with outside space.

Latest Bank of England figures show mortgage approvals at their highest level since 2007 while there were more deals in October than any month since 2016.

Nationwide’s chief economist Robert Gardner said: “The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy. Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.”

“However, housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.

Agents and market commentators said they have been astonished by the strength of the market since the summer.

Nick Barnes, head of research, at agents Chestertons said: “Despite Covid-19 continuing to disrupt day-to-day life, buyer interest remains remarkably strong. Our sales offices have witnessed a clear increase in activity compared to November last year. Whilst the Stamp Duty holiday has certainly played its part, buyers have further been motivated by the government’s decision to keep the housing market open during the second national lockdown.”

David Westgate, chief executive at agents Andrews Property Group, said: “Pent-up demand, coupled with the prospect of saving up to £15,000 in stamp duty, has created a near frenzied property market.

“Despite national circuit-breaker lockdowns, people are wary of the deepening economic crisis that lies ahead, especially the impact it could have on lenders, and this continues to drive transaction volumes.

“Better to borrow and buy now before the banks potentially pull down the shutters, many have concluded.

“Activity levels usually drop off in December but the stamp duty holiday could turn that on its head this year. Talk of a potential vaccine in the New Year has further buoyed confidence.

“We are bracing ourselves for a frantic festive period, and for house prices to potentially rise even further over Christmas.”

Nicky Stevenson, managing director at national estate agent group Fine & Country, said: “The festive season normally presents a big bump in the road for the property market but, for the first time ever, Christmas is cancelled. The market momentum has enjoyed a second, third and now a fourth wind to take prices to a five-year high, driven by unseasonally strong demand at a time of year that normally sees transactions tail off.”

Lucy Pendleton, property expert at estate agents James Pendleton, said: “There’s no point looking for a Santa Rally in the housing market this year, the Rishi Rally has already beaten him to it and his star isn’t ready to fade yet.

“The fact that house price growth will soften in the first half of 2021 is possibly the worst kept secret in property but significant, outright falls are not a done deal. There has been some speculation that house prices will decline next year by eight per cent, roughly in line with the dent made in GDP this year, but the market may yet defeat those forecasts. Buyers were nimble in how they reacted to the stamp duty holiday but they are rarely financially naive.

“The demand that continues to drive this growth has been fuelled by those who feel financially secure and can think long term. The longer this winning streak continues, the more of them there are, so a softer landing next year might be more self-fulfilling than people imagine.”

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