Average UK house price hit new record high of £252,000 in December

Vicky Shaw

The average UK house price reached a record high of £252,000 in December 2020, official figures show.

Property values surged by 8.5% year on year – marking the highest annual growth rate since October 2014, the Office for National Statistics (ONS) said.

In November, house prices had increased by 7.1%.

As buyers searched for bigger properties, detached property prices rose by 10% in the year to December – double the 5% rate at which the average price of flats and maisonettes increased.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The housing market continued at full speed ahead as we approached the end of the year. With demand from buyers for more space – both inside and out – outstripping supply, prices inevitably edged upwards.

“Detached houses continue to be the property of choice, with price growth of flats continuing to lag.”

Average house prices increased over the year in England to £269,000 (8.5%), in Wales to £184,000 (10.7%), in Scotland to £163,000 (8.4%) and in Northern Ireland to £148,000 (5.3%).

Within England, the North West had the highest annual growth in average house prices (11.2%), while London recorded the smallest increase (3.5%).

London’s average house prices remain the most expensive of any region in the UK at £496,000 in December 2020.

The North East continued to have the lowest average house price in England, at £141,000, and has been the final English region to record prices passing their pre-economic downturn peak of July 2007.

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

The stamp duty holiday is due to end next month and there have been concerns that some buyers may pull out if they do not meet the deadline.

Stamp duty applies in England and Northern Ireland, but similar property tax holidays have been applied in Scotland and Wales.

The property tax holidays are due to end on March 31 across the whole of the UK.

Property website Rightmove has estimated that, in the event that the Government decides to extend the deadline by six weeks, between 120,000 and 160,000 additional property transactions in England could potentially benefit from the tax saving.

If 160,000 transactions make it through, buyers could save around £1 billion in total, the website calculated.

Rightmove estimates there are around 412,000 sales which were agreed last year across Britain currently in the legal process of going through.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Evidence already is accumulating that prices will fall back this year.

“Prices surged in the second half of last year in response to the boost from the temporary increase in the threshold for stamp duty, and strong demand from households seeking larger properties due to the pandemic.

“Note that prices for detached properties rose by 10% year over year in December, double the 5% increase for flats.

“But timelier data suggest that the official measure of prices, based on transactions, will dip when the threshold for stamp duty returns to £125,000 at the end of March, from £500,000 at present.”

Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “The market remains open, but there’s a reluctance to view properties or open homes at a time when the virus is so prevalent.

“Meanwhile, everyone involved in the sales process is having to work around social distancing rules, creating delays in everything from conveyancing to surveying properties. It means offers made in 2021 are highly unlikely to complete by the stamp duty holiday.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: “Although these comprehensive figures show prices still rising, they are a little dated as they reflect a period when the possibility of taking advantage of the stamp duty holiday was much greater than it is now and lockdown restrictions were not as intense.

“Since then, the market has come off the boil as the possibility of profiting from that tax holiday recedes and the reality of juggling home schooling and further restrictions begins to bite.

“However, there is still some life in the market as lockdown helps to concentrate many potential buyers and sellers’ minds as far as moving is concerned.”

The ONS warned that, because of the impact of the coronavirus pandemic on housing transactions, larger revisions may need to be made to its statistics than usual.

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