House prices ‘rise by fastest annual rate for 19 years’

House prices in December were 9.8% higher than the same period in 2020, marking the biggest year-on-year rise since March 2003, according to Halifax.

The latest Halifax House Price Index shows the average house price in the United Kingdom in December was £276,091, an increase of £24,537 on the £251,554 recorded in December last year.

Average prices rose 1.1% on the figure for November and have now risen for six consecutive months. Quarterly growth reached 3.5% in November, the highest increase since 2006.

Russell Galley, managing director of Halifax, said the housing market “defied expectations in 2021”

He said: “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.”

Galley said any interest rate rise to tackle increasing inflation would slow the market considerably in 2022.

This was echoed by Scott Clay, distribution development manager at lender Together. He said: “It is likely 2022 will paint a different picture; we can expect the housing market to cool down with the latest interest rate rise, continued concern around the Omicron variant, the high cost of living and overall economic uncertainty.

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Tom Bill, head of UK residential research at Knight Frank, said if the Omicron variant is milder than expected this could lead to more properties coming to the market, resulting in downward pressure on prices.

He said: “Mortgage costs will rise as pressure increases on the Bank of England to raise rates and more sellers will come forward as the prospect of further restrictions recedes, redressing the imbalance between low supply and high demand that has led to gravity-defying price growth in recent months.”