Official: Average UK house price broke £250k barrier in 2020
The average property in the UK rose £20,000 in value in 2020 to break the £250,000 margin for the first time, according to the Office for National Statistics (ONS).
The agency reported an average increase of 8.5 per cent over the year to December, the highest annual growth rate since 2014 which took the typical property value to £252,000.
Remarkably, the North East finally passed its pre-credit crisis house price peak – a full 13 years on.
In July 2007 the average property in the region was worth £139,400 and in December 2020 it finally broke this level to reach £141,154, making it the last region to do so, the ONS reported.
Of the four home nations Wales saw the highest annual increase at 10.7 per cent to £184,000, while the North West was the fastest growing English region at a rate of 11.2 per cent.
Among the other nations, house prices in England rose by 8.5 per cent to £269,000, in Scotland by 8.4 per cent to £163,000 and in Northern Ireland by 5.3 per cent to £148,000 in Q4.
Large houses rise most
Unsurprisingly the pandemic appears to have had a significant impact on this surge as the ONS suggested it caused people to “reassess their housing preferences”.
This was borne out with the average price of detached properties increasing by 10 per cent in the year to December 2020, while flats and maisonettes rose by exactly half that at five per cent.
Month-on-month the national average increase was 1.3 per cent between November and December 2020, following an increase of 1.2 per cent in the previous month.
This shows prices continuing to remain strong until the end of the year – however other house price indexes suggest the market started to slow in January and may continue to do so in the first half of 2021.
The temporary stamp duty holiday which is due to close on 31 March is also likely to have played a part in the end of year surge with buyers rushing to get started in time to meet the deadline.
Diverging opinions for 2021
Property industry representatives are however split on whether the trend will continue past the stamp duty deadline, or if prices will ease off with the incentive gone.
Yorkshire Building Society strategic economist Nitesh Patel suggested it was likely to be the latter. “This could be further exacerbated by the furlough scheme ending on 30 April, which could see a rise in unemployment,” she said.
“However, although unemployment remains the main downside risk, there are tentative signs that demand is still strong. Internet searches on property portals are still higher than before the pandemic and typically, many middle and higher-income households have seen an improvement in their finances since last March.
“The continued re-evaluation of their housing needs could still drive demand at the middle and top end of the market. Although things may slow a little, provided that first-time buyers are still supported on to the ladder, we would expect to see reasonable levels of activity this year.”
MT Finance commercial director Gareth Lewis suggested the cooling in the market in January would continue until there is a roadmap out of lockdown, but noted some areas were seeing more activity.
“People are hesitant to commit to a property move during lockdown, when you can’t buy furniture from the shops in person and may have children at home rather than in school.
“Some may be choosing to put those transactions on hold until the position becomes clearer.
“While sales volumes are down in England compared with October last year, they have not fallen as far as one might expect. At the same time, sales volumes have risen elsewhere, in Scotland for example, which may suggest that investors are seeking growth in other locations, looking to maximise yields and benefit from capital appreciation at the same time.”
Meanwhile, Gatehouse Bank chief commercial officer Paul Stockwell said: “We don’t expect demand to abate when the stamp duty holiday does end, and, while this may hamper growth slightly, we expect to see the market continue to rise with demand this year too.”