UK house prices rose in December at the fastest annual pace since July 2007 amid strong demand and low supply, but are expected to cool in 2022, according to a survey released on Friday by Halifax.
Prices rose 9.8% on the year following an 8.2% increase in November. On the month, prices were up 1.1% in December, in line with the previous month, with the average property price now standing at a new record high of £276,091.
In cash terms, house prices grew by more than £24,500 in 2021, which marks the largest annual cash rise since March 2003.
Halifax managing director Russell Galley, said: “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 that may have been planned for this year. The extension of the Government’s job and income support schemes also supported the labour market and may have given some households the confidence to proceed with purchases.”
Galley also cited a lack of available homes for sale as a factor behind the price increase.
“Looking ahead, 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. Our expectation is that house prices will maintain their current strong levels but that growth relative to the last two years will be at a slower pace. However, there are many variables which could push house prices either way, depending on how the pandemic continues to impact the economic environment.”