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House prices rise by 7.5%

Written by: Emma Lunn
The average price of a house in the UK rose to £249,000 in January 2021, or £17,000 higher compared to January 2020.

The rate of growth had eased in the year to January, compared to 8% for the year to December 2020.

“The increases may reflect factors including pent-up demand, some possible changes in housing preference since the pandemic, and a response to the changes made to property transaction taxes across the nations,” the ONS said.

“Changes in the tax paid on housing transactions may have allowed sellers to request higher prices as the buyers’ overall costs are reduced,” it added.

The data also showed a preference for detached houses compared to flats. The average price of a detached property rose 8.6% while for flats and maisonettes it was 2.6%.

“The dash for space continues as buyers snap up larger homes, adding upward pressure on prices. The popularity of detached homes has grown since March 2020, now accounting for 28% of all home sales, up from 22%. Flats are at 12%, down from 17%,” said Nitesh Patel, strategic economist at Yorkshire Building Society.

In England, price growth was 7.5% and the average price £267,000, in Wales, it was 9.6% and £179,000, in Scotland the average price rose 6.9% to £164,000, and in Northern Ireland, it was 5.3% and £148,000.

Regionally in England, the highest growth was in the North. This was led by the North West at 12%, then Yorkshire and the Humber with 8.9%, and at 8.5%, the North East.

The lowest growth was 4.7% in the West Midlands, then London at 5.3%, and the South East with 6.4%.

The average price in London remained the highest regionally at £501,000 in January 2021.

“These figures prove that the housing market adapted 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,” said Cloe Atkinson, managing director at Mortgage Engine.

“A large part of this success is down to adoption of technology-driven solutions, from remote viewings to widespread use of automated valuation models. With the support of technology, lenders have been able to provide for customers throughout the pandemic,” Atkinson added.

House price growth has slowed over four years, driven mainly by the south and east of England. The growth rate had begun to rise in early 2020 before Covid-19 restrictions were introduced.

On a non-seasonally adjusted basis, average house prices decreased by 0.5% between December 2020 and January 2021, compared with an increase of 0.1% in the same period a year ago.

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