ONS report that on a regional level, average house prices increased over the year in England to £267,000 (7.5%), in Wales to £179,000 (9.6%), in Scotland to £164,000 (6.9%) and in Northern Ireland to £148,000 (5.3%).
The North West was the English region which saw the highest annual growth in average house prices (12.0%), while the West Midlands saw the lowest (4.7%).
This morning's data shows that the average house price stood at £249,000 in January 2021 - £17,000 higher than January 2020.
Cloe Atkinson, managing director, Mortgage Engine, comments: “The rise in house prices in January reflects a busy start to the year for the market, which has been made busier by the recently extended Stamp Duty holiday. The figures are also further proof that the housing market has adapted fully to operating during the pandemic, even in lockdown conditions. Brokers and lenders are handling record levels of activity, while also managing tough lockdown restrictions and a rise in the number of borrowers affected financially by the virus.
“A large part of this success is due to the adoption of various tech-driven solutions, from remote house viewings to more widespread use of automated valuation models (AVMs). With the support of technology, lenders have been able to provide for their customers throughout the pandemic. Technology has provided versatility and resilience for the market and this is part of the reason why the industry needs to embrace tech solutions, sooner rather than later. With property prices buoyant and the market in good health, it’s time for the industry to invest in this tech now, rather than playing catch-up later.”
Anna Clare Harper, chief executive of asset manager SPI Capital, says: "Despite being two months old, this data is relevant because it shows a more complete picture than other house price indices. This is important because, as the last year of data shows, news headlines around house price growth both reflect and influence buying and selling decisions. Property is emotional, and positive headlines encourage buyers and sellers to hurry, to avoid the ‘fear of missing out’. This, in turn, boosts house price growth.
"Growth of 7.5% in the year to January 2021, down slightly from the extraordinary 8% in the year to December 2021, is significant, in particular, compared to many other more volatile or low return assets. House prices were led by the North West, which grew by 12%, whereas London house prices grew by ‘just’ 5.3% (still an impressive rate of growth). The lowest growth was seen in the West Midlands, at 4.7%. the lowest by just 3.5%. The trend of detached and semi-detached properties leading the way continued, with growth rates of 8.6% and 9% respectively, followed closely by terraced properties.
"Overall, house price growth in the last year has been influenced by five important factors. House prices were boosted by the temporary stamp duty reduction and cheap debt as a result of very low-interest rates, which combine to give buyers a ‘discount’; the ongoing release of pent-up supply and demand, desire for improvement and changing lifestyle requirements amongst existing homeowners; and the ‘flight to safety’, since in times of uncertainty, people want to keep their money in a stable asset with low volatility.
"These trends were countered by a reduction in appetite from international buyers, who suffered travel restrictions and nerves around Brexit and Covid-19. We are now seeing the return of international buyer confidence, which is likely to boost house prices further.
'Of these trends, the most significant has been the temporary stamp duty reduction. This is because transaction taxes like stamp duty have had a more than proportionate impact on prices. Buyers who use mortgages can take debt out on the property price, but they cannot use finance to fund transaction costs. It’s extension, and the smoother transition anticipated from ‘tapering down’ of this relief are great news for buyers and indeed sellers in the UK housing market as decisions as the SDLT reduction acts as a lubricant in the housing market, reducing the friction that holds back buyers.'
Rob Barnard, Director of Intermediaries at Masthaven, comments: “The UK housing market continues to prove resilient, with the latest data from the ONS showing that the average house price increased once again in January. The market has been on a steady upwards trajectory since the end of the first lockdown and this most recent data from January demonstrates that the industry has learned to operate effectively during lockdown, adapting thanks in part to tech tools, such as remote valuations and remote viewings.
“The Stamp Duty holiday has also certainly contributed towards growth in the market, but once this comes to an end it’ll be imperative that borrowers still have access to clear support and advice, so they’re not left in the lurch. The pandemic and its impact on the personal finances of so many borrowers could mean that specialist lending will play an important role on the road back to normality. With so many people affected directly or indirectly by the pandemic, brokers and lenders will need to work together even more closely to make sure borrowers can find products that are right for them.”
