(Bloomberg) -- UK home sellers boosted the prices they’re asking for their properties at the strongest pace in four months, indicating the market so far is shaking off the impact of a cost-of-living crisis and higher borrowing costs.

The property listing website Rightmove said prices rose 0.7% this month after a 1.3% drop in August. Buyer demand is 20% higher than the pre-pandemic average, and the supply of homes coming to the market has returned to 2019 levels. 

Housing has remained a bright spot in the economy, growing despite the recession that came with Covid-19 lockdowns. While rising interest rates and inflation are starting to weigh on affordability, Rightmove said the market could get another boost from the government’s decision on Friday to cut taxes on purchases.

“The housing market continues to be extremely resilient even in the face of the economic headwinds that are stretching household finances,” said Tim Bannister, Rightmove’s director of property services. “Prices are likely to remain strong while demand continues to outweigh supply.”

Bannister said the Treasury’s move to double the threshold for charging stamp duty to £250,000 means a third of all homes currently for sale are exempt, which will stimulate demand. 

“We could see more first time buyers,” Bannister said. “But because the change is permanent and because of gathering headwinds such as rising mortgage rates, we expect to see a more gradual increase in demand.”

The report also showed London house prices rose 2.1% in the last month, the strongest gain of any of the regions tracked by Rightmove. Prices fell in the Midlands and Wales.

London’s market was hit hard in the pandemic, with many people seeking to move out of urban areas to properties with space for a home office. It took 50 days on average to sell a home in the capital last month, well above readings in the 20s and 30s everywhere else in the country.

Read more:

  • UK Slashes Property Tax With Biggest Cuts for First-Time Buyers

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