Average UK house price rose by more than £24,500 last year

interactive investor comments on the Halifax House Price Index.

Myron Jobson, Personal Finance Campaigner, interactive investor says: “The average UK property price hit a new record high of £276,091 in December despite the emergence of the Omicron Covid variant, as high demand and a persistently low supply of homes – family homes in particular – continued to dictate the pace of rising house prices. If Omicron proves to be a lingering and disruptive problem, it could widen the mismatch between housing demand and supply, which could put upward pressure on prices.

“The end of the stamp duty holiday has taken some of the heat out of the UK housing market, which may cool further if the Bank of England follows December’s interest rate rise with further increases in the year to guard against increases in inflation. The Omicron variant could also reinforce the slowdown if it results in a weaker labour market.

“Covid remains a perpetual threat to the housing market, but sentiment remains impressively strong and resilient. Mortgage interest rates still remain super low by historical standards and buyers are keen to get their lives back on track post-lockdown.

“However, house prices continue to outstrip the rate of wage growth, making it difficult for wannabe first-time buyers to raise a deposit – the hardest aspect of getting on to the property ladder. The likely increase in mortgage rates over the year will contribute further towards the unaffordability of homeownership.

“House prices have continued on an upward trend three months after the stamp duty holiday came to an end – demonstrating that while the scheme helped to propel house prices, it was not the only driver.”

Key points

• Average UK property price hits a new record high of £276,091
• House prices have increased by over £24,500 in 2021, the largest annual cash rise since March 2003
• House price growth in 2022 is expected to slow