The latest figures released by Halifax this morning have shown that house prices increased by over £24,500 in 2021, the largest annual cash rise since March 2003, but are expected to slow in 2022.
Wales remains by far the strongest performing nation or region in the UK with annual house price inflation of 14.5%, taking the average house price to £205,579. However, the rate of increase is slightly down from the 14.8% rise recorded in November. Northern Ireland was also one of the strongest performing regions, again recording double-digit annual growth (10.6%, average house price of £170,946).
House prices also continue to rise in Scotland, with the average property now up 9.7% year-on-year, with an average price of £192,988, the most expensive on record.
In England, the North West was the strongest performing region (11.8%), followed by the South West.
Despite registering a strong quarterly rise in prices (2.9%), up from 1.1% in November, London remains by far the weakest performing for annual inflation (2.1%).
Russell Galley, Managing Director, Halifax, said: “UK house prices climbed again in December for the sixth consecutive month in a row, up 1.1%. The average price for a property now stands at £276,091, an increase of more than £24,500 compared to December 2020, marking the strongest year-on-year cash rise since March 2003.
“The housing market defied expectations in 2021, with quarterly growth reaching 3.5% in December, a level not seen since November 2006. In 2021 we saw the average house price reach new record highs on eight occasions, despite the UK being subject to a ‘lockdown’ for much of the first six months of the year.
“The lack of spending opportunities afforded to people while restrictions were in place helped boost household cash reserves. This factor, alongside the Stamp Duty holiday and the race for space as a result of homeworking, will have encouraged buyers to bring forward home purchases they’d maybe planned for this year. The extension of the government’s job and income support schemes also supported the labour market and may have given some households the confidence to proceed with purchases.
“A lack of available homes for sale, and historically low mortgage rates, have also helped drive annual house price inflation to 9.8%, its highest level since July 2007.
“Looking ahead, the prospect that interest rates may rise further this year to tackle rising inflation and increasing pressures on household budgets suggest house price growth will slow considerably. Our expectation is that house prices will maintain their current strong levels, but that growth relative to the last two years will be at a slower pace. However, there are many variables that could push house prices either way, depending on how the pandemic continues to impact the economic
environment.”
Nathan Emerson, CEO of Propertymark comments: “These latest figures for December highlight a continued increase in the average house price across the UK. This is unsurprising due to the volume of demand from buyers remaining strong at a time when historically, during winter months, demand tapers down.
“Our housing market report for November revealed a 12 per cent increase in the average number of registered buyers, but the lowest number of homes on the market per branch ever recorded. This indicates fierce competition for buyers as there continues to be a huge gap between supply and demand.
"We anticipate that our next report will mirror this data and continue the same trend in December, as agents on the ground report an extremely busy month in comparison to previous years.
“Movement within the market in 2022 is inevitable as many buyers continue in their hunt for a property, but uncertainty remains surrounding COVID-19 and looming restrictions due to new variants which could deter buyers from entering as soon as they would like.”
Gareth Lewis, commercial director of property lender MT Finance, says: "Prices are still increasing but transactional flow has slowed a little, along with price growth.
"It will be interesting to see the housing market return to a level of normality over the next few months, without the government stimulation in the form of the stamp duty holiday which fuelled much of last year's activity.
"Business has been buoyant as we start the year, with plenty of enquiries coming through. January can be quite a slow month as people gradually get back to work and find their feet but there are still motivated buyers who didn’t transact last year and are keen to do so, particularly before interest rates rise further."
Nigel Purves, CEO of Wayhome commented: “The average price for a home in this country continues to soar far out of reach of most buyers. Even at the height of the festive period, people pressed on with their property plans ahead of the New Year, but with interest rates rising, committing to a mortgage could become a tricky endeavour.
"It’s a particularly tough situation for first-time buyers to navigate as they get to grips with what this means for their chances to get on the property ladder. It’s time to shine a light on the property market in the UK; the existing routes to homeownership are not fit for purpose. We need innovation, and fast.”
