House prices grow faster than any full year for 17 years
UK house prices rose at a faster rate in 2021 than in any calendar year since 2004. The UK's housing market defied expectations last year.
In 2021 we saw the average house price reach new record highs on eight occasions, despite the UK being subject to a 'lockdown' for much of the first six months of the year. The lack of spending opportunities afforded to people while restrictions were in place helped boost household cash reserves. Prices increased by 9.8% during 2021, the fastest for any calendar year since a 12.5% rise in 2004. The average UK property price hit a new record high of £276,091 in December.
This factor, alongside the stamp duty holiday and the race for space as a result of homeworking, will have encouraged buyers to bring forward home purchases they'd maybe planned for this year. Looking ahead, the prospect that interest rates may rise further this year to tackle rising inflation and increasing pressures on household budgets suggest house price growth will slow considerably. There is an expectation the market will slow.
We don't see the triggers for a price correction. From an economic perspective, unemployment was the big risk in that respect and that looks to have been contained. Other agents have reported continued demand from buyers, despite January traditionally being a quiet time of the year for the sector.
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