House prices have ended the year at a record high with annual price growth at its strongest in 15 years.
The average price of a home hit £254,822, up by almost £24,000 compared to the previous year, according to Nationwide, Britain’s largest building society. In cash terms it is the largest yearly rise on record.
Prices grew by 10.4 per cent in the year to December, up from 10 per cent in November and the low stock of homes on the market is thought to have contributed to the fast pace of growth.
Wales was the strongest performing region, with house prices up by almost 16 per cent in the past year. London recorded the weakest rate of growth at 4.2 per cent. The average price of a house in Wales is £196,759 compared with £507,230 in London.
The results reflect the continuing trend of city dwellers moving to more spacious homes in rural areas following the rise in flexible working and remote jobs brought on by the pandemic.
Property in Taunton, the county town of Somerset, increased by more than 20 per cent in the past year, almost four times the national average, according to research published today by Halifax, one of Britain’s biggest mortgage lenders.
Chippenham in Wiltshire also benefited from the surge in demand. The town had the biggest rise in house prices in cash terms, with prices up by £58,322, or 18.1 per cent, from £322,859 in 2020 to £381,181 this year.
The London borough of Westminster had the largest drop in house prices, the average home value falling by 6.9 per cent from £792,896 to £738,088 in the past year.
The price of high-end houses outside London rose at its fastest pace since February 2016, with an increase of 3.2 per cent in the past year, according to the estate agency Knight Frank. Prices in central London increased marginally by 1.3 per cent in the year to December after having fallen by more than 4 per cent in the previous year
Many buyers brought forward their house purchase to this year to make use of the stamp duty holiday, which ended in September, according to Robert Gardner, Nationwide’s chief economist. “It appears likely that the housing market will slow next year since the stamp duty holiday encouraged many to bring forward their house purchase in order to avoid additional tax,” he said.
The end of the stamp duty holiday, which helped buyers to save as much as £15,000, caused a dip in house prices in October. The average price of a home fell to £268,000, down from a record high of £271,000 in September, according to the Office for National Statistics.
The Omicron variant of Covid-19 will reinforce the slowdown if it affects the labour market, Gardner added. “Even if wider economic conditions remain resilient, higher interest rates are likely to exert a cooling influence,” he said. “Indeed, house price growth has outpaced income growth by a significant margin over the past 18 months and, as a result, housing affordability is already less favourable than before the pandemic struck.”