Average house prices in the UK have hit another all-time high. According to Nationwide, a typical home in the UK had a value of £254,822 in December, an increase of just under £24,000 compared to January last year.
But like most other major lenders, Nationwide predicted a gradual slowdown for the sector over the coming months, due in part to the withdrawal of the government’s temporary stamp duty holiday.
In addition, Nationwide believes that the spread of the Omicron variant of COVID-19 could adversely affect the market’s performance.
“The Omicron variant could reinforce the slowdown if it leads to a weaker labour market,” Nationwide’s chief economist, Robert Gardner, said.
Mr Gardner also said that the inevitability of interest rate hikes over the course of the year will have a “cooling influence” on the sector, which sustained its record-breaking performance throughout much of 2021.
Bank of England base rates were recently increased from a historic low of 0.1% to 0.25%, with more increases on the cards over the coming months. As mortgage rates grow and house prices hover at all-time highs, getting a foot on the property ladder is likely to become increasingly difficult for many first-time buyers.
“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,” Mr. Gardner added.
The UK’s highest-growth regions
In stark contrast to traditional norms, London saw the lowest average property price increases over the course of the last 12 months, up 4.2% to just over £507,000. By contrast, average house prices in Wales skyrocketed by almost 16%, reaching a new high of £196,759.
A brief summary of house price growth by region in 2021:
- Wales: Up 15.8% to £196,759
- Northern Ireland: Up 12.1% to £167,479
- South West: Up 11.5% to £294,845
- Outer South East: Up 11.3% to £329,869
- North West: Up 11.2% to £196,806
- Yorkshire and Humberside: Up 10.8% to £190,855
- East Anglia: Up 10.4% to £268,146
- East Midlands: Up 10.4% to £221,813
- Scotland: Up 10.1% to £172,605
- West Midlands: Up 9.4% to £227,031
- Outer Metropolitan Area of London: Up 8.8% to £410,992
- North: Up 7.7% to £148,105
- London: Up 4.2% to £507,230
Commenting on the figures, Nationwide stated that this was the first time in the bank’s history that Wales had seen the largest annual house price growth of any UK region.
“Price growth remained elevated in Northern Ireland at 12.1%, the strongest end to the year for the region since 2007,” Mr Gardner said.
“Annual house price growth in Scotland was 10.1%, in line with the wider UK.”