Homeowners awoke this morning to a late Xmas gift as the Halifax confirmed that the average property in the UK had increased in value by almost £25,000 over the course of 2021.
However, the Halifax was quick to warn that the growth seen in 2021, the highest since June 2007, won’t be replicated this year.
Here are some of the key takeaways from the index:
- Average UK property price hits a new record high of £276,091
- House prices have increased by over £24,500 in 2021
- House price growth expected to slow in 2022
Here’s what the experts had to say…
Andrew Montlake, managing director of London-based independent mortgage broker, Coreco:
“So much for the seasonal lull. 2021 ended on a ridiculous high after a surreal year and a half of house price growth. And while 2022 will not have the dramatic growth headlines of last year, the general underlying trends remain in place.
“The past two years have radically transformed what people want from their homes and even though rates are rising they are still exceptionally low in historical terms. The market is also being propped up by a chronic lack of supply. Although rising rates and the general cost of living due to the energy crisis will derail some people’s plans, we will remain in a generally low interest rate environment for the remainder of the year and this will support house prices. Any growth in house prices in 2022 will certainly be more conservative in nature and rises and falls will vary regionally.”
Nigel Purves, CEO of Wayhome:
“The average price for a home in this country continues to soar far out of reach of most buyers. Even at the height of the festive period people pressed on with their property plans ahead of the New Year, but with interest rates rising, committing to a mortgage could become a tricky endeavour.
It’s a particularly tough situation for first-time buyers to navigate as they get to grips with what this means for their chances to get on the property ladder. It’s time to shine a light on the property market in the UK; the existing routes to homeownership are not fit for purpose. We need innovation, and fast.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Buyers are clearly still emerging following their short hibernation to carry on where they left off, quickly snapping up new properties which come onto the market. Most are choosing to forget worries about rising inflation, interest rates and taxes to say nothing of Omicron.
“However, lack of stock is reducing the number of transactions and supporting prices.Market appraisals and new instructions are improving but not quick enough yet.
“Stretched affordability means that prices are unlikely to rise as quickly as they did for a large part of 2021 but prices of family houses in particular will continue to do well.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Even though the Bank of England finally made its move and increased interest rates in December, confidence in the housing market continued unabated to finish the year on an impressive high. Although the last month of the year tends to be quieter for the market as people wind down for Christmas, there was still plenty of interest in buying homes and more demand than supply pushed house prices up further still.
“Low mortgage rates have been one of the contributing factors to the housing boom and although some lenders are starting to tweak mortgage rates upwards, pricing remains competitive. There is still plenty of confidence among buyers but perhaps now is the time to secure a cheap fixed mortgage rate to protect against the potential of further rate rises.”
Gareth Lewis, commercial director of property lender MT Finance:
“Prices are still increasing but transactional flow has slowed a little, along with price growth.
“It will be interesting to see the housing market return to a level of normality over the next few months, without the government stimulation in the form of the stamp duty holiday which fuelled much of last year’s activity.
“Business has been buoyant as we start the year, with plenty of enquiries coming through. January can be quite a slow month as people gradually get back to work and find their feet but there are still motivated buyers who didn’t transact last year and are keen to do so, particularly before interest rates rise further.”
Graham Cox, founder of the Bristol-based Self-Employed Mortgage Hub:
“Don’t get carried away by the largest annual cash rise since March 2003. Halifax’s December figures could be the last hurrah for runaway house price inflation.
“Households are starting to batten down the hatches and are facing a financial tsunami of higher fuel and food bills, national insurance increases and rising interest rates. And let’s not forget the ongoing uncertainty around Omicron.
“House prices are notoriously hard to predict, but after being artificially pumped higher by the stamp duty holiday, it’s difficult to imagine prices rising for much longer. I suspect they will fall in 2022, as the pandemic payback bill kicks in and the energy crisis bites.”
Lewis Shaw, founder of Mansfield-based Shaw Financial Services:
“The race for space, first-time buyers with bigger deposits due to lockdowns and low interest rates saw the 2021 property market end on a high. We saw continued house price growth due to unprecedented demand, a shortage of housing stock and cheap mortgage rates. However, with inflation raging and rates on the up, 2022 is not going to be a 2021. Buckle up buttercup. We could be in for a rough ride this year.”
Scott Taylor-Barr of Shropshire-based Carl Summers Financial Services:
“Few would have betted against December putting in a ludicrous performance and it duly delivered. Moreover, despite rising inflation, interest rates and energy costs, it’s hard to see property prices going backwards in 2022 due to the sheer lack of supply. 2020 and 2021 saw some staggering property price increases, as demand surged on the back of the Stamp Duty holiday and the shift to homeworking. I don’t think this will continue into 2022 as the market shifts from having tailwinds to headwinds. I believe we’ll see a flat market for most of 2022, with very little in the way of price rises in general.”
Scott Clay, distribution development manager at specialist lender Together:
“House prices in 2021 closed the year off in another high as the average increased to £276,091 in December, making it a-record breaking year.
“Momentum in the property market surpassed all expectations last year owing to low interest rates and government assistance like the stamp duty holiday, and the race for space influenced demand during the pandemic. It is likely 2022 will paint a different picture; we can expect the housing market to cool down with the latest interest rate rise, continued concern around the Omicron variant, the high cost of living and overall economic uncertainty. However, the same challenges remain for first time buyers and house-movers attempting to scale the property ladder as house prices remain inflated and affordability may become an issue.
Rob Peters, director of Altrincham-based Simple Fast Mortgage:
“Traditionally in December, even the most staunch first-time buyers take a break from house hunting, but December 2021 was a month like no other based on this evidence. With demand high and supply extremely low, a further rise in interest rates won’t upset the property market this year.”
Paul Neal of Derbyshire-based Missing Element Mortgage Services:
“December 2021 was no standard December, with demand unusually strong. Even though lenders are slowly nudging up their interest rates and the energy crisis is taking a grip, this doesn’t appear to have put the brakes on buyers. A lack of properties is still supporting prices and competition is as intense as ever when the right property comes onto the market.”
Andrew Simmonds, director at Bristol-based Parker’s Estate Agents:
“Having defied expectations throughout the year, it was no real surprise that December saw much of the same. Although prices this year will grow at a slower rate than in 2021 due to rising rates, taxation and the energy crisis, the market certainly won’t go off a cliff due to the lack of supply. I am expecting to see many vendors sell and move to rented with a view to onward purchasing later in 2022 or 2023.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“After an incredible year, the average UK property costs a record-breaking £275,000, with the last six months of 2021 showing unbroken growth.
“The average home rose £24,000 in a year – the largest annual cash rise since 2003, flying in the face of the economic uncertainty faced by many prospective buyers and the scaling down of government incentives.
“The housing market starts 2022 in a very strong position. Valuation requests from homeowners are a fifth higher than the year before, mortgage approvals are the highest they’ve been for years, and the pandemic appears to be on the wane.
“Further interest rate rises are likely this year, but while demand outstrips housing, we expect that prices will continue to rise this year, albeit at a much slower pace than we saw in 2021.”
