UK house prices rose by more than 10% in 2021, the fastest growth rate in 15 years, according to new figures that highlight the strength of the pandemic housing boom.
The price of an average house in the UK hit a record £ 254,822 in December, up nearly £ 24,000 for the year, according to data released Thursday by Nationwide, the largest construction company in the UK. UK.
Prices are now 16% higher than before the pandemic in early 2020, a result few economists anticipated as UK countries embark on the first in a series of lockdowns.
Yet after the initial activity freeze, the housing market remained buoyant throughout the pandemic. People forced to spend more time at home sought more space, while the UK government also heavily subsidized the market with a temporary reduction in stamp duties and interest rates remained near their lows. historical.
The annual growth rate of 10.4% in December was the highest since 2006 and represented a slight acceleration from the 10% rate in November, although annual growth has been in double digits since May, at less than one slight slowdown in October after the end of stamp duty. holidays. In June, annual price growth reached 13.4%, the fastest since 2004 during the housing bubble before the global financial crisis.
In contrast, average earnings rose 4.9% during the year through October, according to the Office for National Statistics.
Robert Gardner, Nationwide’s chief economist, said continued strong demand and still low housing stock in the market had contributed to the price spike, but added that a slowdown could be underway in 2022 – and in particularly if the Bank of England follows the month of December. rising interest rates with further increases over the coming year.
“It seems likely that the housing market will slow down next year, as the stamp duty holiday has encouraged many people to pre-purchase their homes in order to avoid additional taxes,” he said. . “The Omicron variant could reinforce the downturn if it leads to a weaker job market. Even if broader economic conditions remain resilient, higher interest rates are likely to exert a chilling influence. “
Wales was the UK region with the fastest growth in house prices over a calendar year, 16%, for the first time since Nationwide began collecting data in 1973. The South- west was the fastest growing region of England, corroborating separate data from Halifax, part of Lloyds Banking Group, which showed Taunton to be the city with the highest annual price growth, above 20%. The measure of annual home price growth in Halifax was 6.2%.
London, where house prices are already very high, was the slowest growing region, with prices up 4.2%. London was the only region where price growth did not accelerate in 2021 compared to 2020. Nationwide’s accessibility measure showed that a London buyer with a 20% deposit should be among the 10% the richest to be able to buy at the average price.