Average UK house price hits record high of £250,000

The average UK house price reached a record high of £250,000 in November – as typical London property values broke through the £500,000 barrier for the first time.

Across the whole of the UK, property values increased by 7.6% over the year to November 2020, marking the highest annual growth rate since June 2016.

The Office for National Statistics (ONS), which released the figures, said the average house price in London surpassed £500,000 for the first time in November 2020. The typical property price in London lifted to a record high of £514,000.

Within England, London and Yorkshire and the Humber had the joint highest annual house price growth, with average prices increasing by 9.7% in the year to November 2020.

House prices in the north-east of England also finally surpassed their previous pre-economic downturn peak in November 2020.

The North East continued to be the English region with the lowest average house price, which stood at £140,000 in November 2020. But this was higher than the previous peak of £139,400 recorded in July 2007.

Recent price increases may reflect a range of factors including pent-up demand, some possible changes in housing preferences since the coronavirus pandemic started and a response to the changes made to property transaction taxes across the nations, the ONS said.

Two London boroughs recorded annual price growth of more than 20%.

They were Kensington and Chelsea (28.6%) and Brent (23.9%).

The sharp annual price increase in Brent is partly caused by prices having fallen in the borough a year earlier, the report said.

The ONS said demand for property in inner-London may be particularly responsive to a temporary stamp duty holiday, which ends on March 31, as property prices are high and therefore so is the corresponding tax to be paid.

London also has a relatively high proportion of properties bought for investment, including from cash buyers and overseas investors. As such, demand for property in inner-London is likely influenced by a broader range of factors than the rest of the UK, the report said.

Average house prices increased over the year in England to £267,000 (a 7.6% annual increase), Wales to £180,000 (7.0%), Scotland to £166,000 (8.6%) and Northern Ireland to £143,000 (2.4%).

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Come December’s data, the average property price will have likely broken through the £250,000 barrier.”

He said lenders are working “flat out” to help get deals already agreed completed before the end of March.

Mr Harris continued: “That said, there is still good availability of credit, despite demand, with competitive rates and more choice at 90% loan-to-value.”

But Samuel Tombs, chief UK economist at Pantheon Macroeconomics said: “The scenario in which house prices reverse some of their recent gains this year is clear to see.”

He said the eventual withdrawal of the furlough scheme, mortgage payment holidays and the return of the stamp duty threshold to its former level “likely would leave house prices about 2% lower by the end of the year than at present”.

Mr Tombs added: “Most of the recent rise in mortgage rates reflects banks’ repricing for the greater risks of lending in the current environment and so likely will persist, even if demand for mortgages eases. That said, Government policies are not fixed.”