UK house prices have risen by the most amount in cash terms in nearly two decades, pushed up by a lack of housing supply, accumulated savings and low interest rates, Halifax figures have shown.
The average price for a property rose 9.8 per cent to £276,091 last month, the mortgage provider said in a statement on Friday, an increase of more than £24,500 compared with December 2020. That is the strongest year-on-year cash rise since March 2003.
The increase compares with a rate of 8.2 per cent in the previous month and is the fastest since 2007. However Halifax expects growth relative to the past two years to slow.
Together with the savings accumulated during the pandemic and the strong labour market, “a lack of available homes for sale, and historically low mortgage rates, have helped drive annual house price inflation”, said Russell Galley, managing director at Halifax.
National house prices grew strongly despite London continuing to underperform with prices growing only by 2.1 per cent, reflecting lower demand as more people looking for bigger houses in less crowded places following increased homeworking. Instead, Wales was by far the strongest performing nation or region in the UK with annual house price inflation of 14.5 per cent.
The figures are in stark contrast with the severe hit that the pandemic inflected on the economy and confirm earlier data by Nationwide that also showed a buoyant housing market at the end of the year. Both calculate their housing prices based on the mortgage they approve.
“The prospect that interest rates may rise further this year to tackle rising inflation, and increasing pressures on household budgets, suggests house price growth will slow considerably,” Galley said.
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