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Average UK house prices up more than £20,000 in a year

Emma Lunn
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Emma Lunn

Average UK house prices have reached a new high of £272,992, up by more than £20,000 compared to the same period last year, according to the latest Halifax house price index.

The index revealed that this is the fifth straight month that average house prices have risen, and it is the second consecutive month where prices have breached £270,000.

The average UK house price is up 1% compared to October, equivalent to an increase of £2,808, and on a rolling quarterly basis house prices are up 3.4%, which the report said is the strongest gain since the end of 2006.

The report added that since the start of the pandemic last year UK house prices have increased by £33,816, or around £1,691 per month.

Wales reported the strongest annual house price inflation of 14.8%, with average house prices passing £200,000 for the first time since Halifax’s reporting started.

Annual house price in the North West came to 11.4%, with average house prices pegged at £209,287. This was followed by Northern Ireland where annual house price growth was 10% and average house prices came to £169,348.

Greater London reported the lowest regional growth of 1.1% but had the highest average house price for £521,129.

Halifax’s managing director Russell Galley said that housing market performance was underpinned by the shortage of properties, strong labour market and strong competition among lenders.

He added that annual house price inflation for first-time buyers was 9.1% compared to 8.8% for homemovers.

Galley also noted that annual price inflation for flats was 10.8% over the past year, compared to 6.6% for detached properties. He said this suggested the race for space was “becoming less prominent”.

He said: “Looking ahead, there is now greater uncertainty than has been the case for quite some time, with interest rates expected to rise to guard against further increases in inflation. Economic confidence may be also be dented by the emergence of the new Omicron virus variant, though it remains far too early to speculate on any long-term impact, given insufficient data at this stage, not to mention the resilience the housing market has already shown in challenging circumstances.

“Leaving aside the direct impact of a possible resurgence in the pandemic for now, we would not expect the current level of house price growth to be sustained next year given that house price to income ratios are already historically high, and household budgets are only likely to come under greater pressure in the coming months.”

Housing market sentiment ‘impressively strong and resilient’

Tomer Aboody, director of property lender MT Finance, said that growth reaching a 15-year high showed continued confidence of buyers in the market.

He said that low interest rates could mean borrowers were “prepared to push their personal boundaries when it comes to how much they are happy borrowing”.

He added that space was still a “main requirement for buyers” with quality homes and locations “most in demand”.

Aboody said: “Even with the new Covid variant and possible interest rate increases on the horizon, market sentiment remains impressively strong and resilient.”

Anna Clare Harper, chief executive of property consultancy SPI Capital, said the latest data could be seen as surprising considering that transactions fell to a nine-year low in October.

She said: “The temporary stamp duty reduction designed to combat the impacts of Covid on the housing market acted as a catalyst, but this was not the cause of recent house-price growth. Many people still want and need to buy a home.

“We also have a severe shortage of quality housing, and stiff competition among lenders, meaning finance is cheap and widely available. As a result, with so many people wanting to, and able to afford to move home, demand is greater than supply and house prices continue to rise.”

She said that going forward the pace of growth would slow, especially as winter months made it more challenging for buyers to view properties due to fewer daylight hours.

First-time buyer fears

Mark Harris, chief executive of mortgage broker SPF Private Clients, said that the housing market continued to exceed expectations and break records.

He pointed to property shortage, strong employment prospects and mortgage pricing as factors pushing up prices, but said there were concerns the increase in prices could negatively impact first-time buyers.

However, Harris said: “Borrowing costs, while rising for those with bigger deposits, remains low by historical standards. And on higher loan to value products, which have been relatively expensive during the pandemic, pricing has been falling to rates last seen two years ago, making mortgages more affordable for first-time buyers.”