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A rush to beat the end of a tax stay and low interest rates pushed UK house price growth to the fastest pace in nearly 17 years this month, Nationwide Building revealed Society.

The UK Nationwide House Price Index rose 13.4% in June from the same month last year, the fastest rate since November 2004, according to the index on Tuesday.

The government’s stamp duty holiday is due to end on Wednesday.

Prices rose 0.7% from the previous month, pushing the average residential property price to £ 245,432.

“The market continues to show significant momentum,” said Robert Gardner, Nationwide’s chief economist. Part of the strength, however, is due to base effects, with June of last year being exceptionally weak due to the first lockdown, he added.

Prices in June were almost 5% higher than in March, he noted. House prices are close to a record relative to average incomes.

“This is important because it makes it even more difficult for potential first-time buyers to collect a deposit,” Gardner said.

House price growth has accelerated since the government introduced the exemption on the first £ 500,000 of primary residential property purchases in July. The full stamp duty holiday ends this month and is reduced before reverting to original rates on October 1, meaning buyers can save up to £ 15,000 until Wednesday.

Andy Haldane, the outgoing chief economist of the Bank of England, said this month during a webinar hosted by the University of Glasgow that the UK housing market was “on fire”.

He added that he was likely to stay strong as long as it was supported by increased demand from richer households with more savings, government support and low interest rates.

Gardner expects the market to remain strong as underlying demand is expected to remain strong in the near term as the economy unlocks.

“Consumer confidence has rebounded as borrowing costs remain low,” he said. “This, combined with a lack of supply in the market, suggests further upward pressure on prices.”

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