UK house prices rose at the fastest rate in 15 years in 2021, reaching an all-time high as low interest rates and a pandemic-induced race for more space boosted demand and housing stocks remained low.
Prices rose at an annual rate of 10.4% in December, making the performance of the strongest calendar year since 2006, according to data from the Nationwide Building Society released Thursday.
The average increase from early 2020, before the pandemic, was 16%. This contrasts sharply with the unprecedented hit in economic activity in the UK.
“Despite maintaining a breakneck pace for most of the year, and in the face of the Omicron variant, the price growth still managed a final sprint,” said Jonathan Hopper, Managing Director of Garrington Property Finders.
The price of a typical UK house hit an all-time high of £ 254,822, up £ 23,902 on the year, the biggest single-year increase in cash since Nationwide began to collect the data in 1991.
“Demand has remained strong in recent months, despite the end of the stamp duty holiday in late September,” said Robert Gardner, Nationwide chief economist. “At the same time, the housing stock in the market remained extremely low throughout the year, which contributed to the sustained pace of price growth.”
This is despite London having recorded weaker annual growth of 4.2% in the three months to December, a third or less of the rate for Wales, Northern Ireland and South East, reflecting demand. increase in larger homes in less frequented areas as a result of the hike. home work.
However, Gardner said he expected the housing market to slow down next year, as the stamp duty holiday encouraged many people to advance their purchase in order to avoid additional taxes. Additionally, the Omicron coronavirus variant could reinforce the downturn if it leads to a weaker job market, while higher interest rates are likely to “exert a chilling influence.”
“House price growth has far outpaced income growth over the past 18 months and as a result housing affordability is already less favorable than before the pandemic,” he said.