Average UK Property Price Ends Year at Record £254,822

2021 closed out with the average UK property price at a new all-time high of £254,822. According to the latest figures released by the Nationwide Building Society, average house prices have increased by an astonishing £23,902 over the past 12 months.

The average UK house price rose by nearly £24,000 during 2021, the biggest increase ever recorded in a single year in cash terms, according to an index.

“The price of a typical UK home is now at a record high of £254,822, up £23,902 over the year, the largest rise we’ve seen in a single year in cash terms,” commented the bank’s chief economist, Robert Gardner.

“Prices are now 16% higher than before the pandemic struck in early 2020.”

While the withdrawal of the temporary stamp duty holiday had been expected to trigger a gradual slowdown, the sector’s stellar performance continued right through to the end of the year.

“Mortgage approvals for house purchases have continued to run above pre-pandemic levels, despite the surge in activity seen earlier in the year. Indeed, in the first 11 months of 2021, the total number of property transactions was almost 30% higher than over the same period of 2019,” Mr. Gardner said.

“At the same time, the stock of homes on the market has remained extremely low throughout the year, which has contributed to the robust pace of price growth.”

An inevitable slowdown in 2022

The combination of numerous economic and political factors will lead to a gradual yet inevitable slowdown for the sector in 2022, analysts predict. Though property prices are set to continue hovering around all-time highs, monthly house price growth is expected to slow throughout 2022.

Speaking on behalf of wealth management firm Quilter, mortgage expert Karen Noye warned that a gradual slowdown in house price growth may not make the market more accessible for first-time buyers.

“As we move into 2022, and away from the whirlwind property market seen throughout 2021—we are likely to see a slowdown in property prices and transactions, particularly if the Bank of England further increases interest rates,” she said.

“While we may see the property market slow, this does not mean buying a home will become instantly more affordable. Alongside the already inflated housing market, mortgage rates have increased following the Bank of England’s rate rise, and as inflation does not appear to be slowing, costs will likely continue to rise.”

“Increased mortgage costs coupled with the uncertainty surrounding the Omicron variant could well make people think twice about moving home, and we could see a break in house price growth as a result. However, supply versus demand issues persist, so we are likely to see a gradual slowing of growth as we head into 2022 as opposed to a sharp drop.”

Impressive end-of-year performance

The sector’s performance during what would traditionally be a fairly quiet time of the year suggests demand will continue to outstrip available supply for some time to come.

“Although the last month of the year tends to be quieter for the market as people wind down for Christmas, there was still plenty of interest in buying homes, and more demand than supply pushed house prices up further still,” commented Mark Harris, chief executive of mortgage broker SPF Private Clients.

His sentiments were echoed by the commercial director of property lender MT Finance, Gareth Lewis, who suggested the wave of post-lockdown demand unleashed on the market is helping sustain its momentum.

“Although many people have made their move, there is still plenty of pent-up demand, which will keep property prices high,” he said.