2021 Average House Prices See Strongest Cash Rise Since 2003

The December 2021 Halifax House Price Index report provides landlords with an invaluable insight into the 2021 property market, why it is where it is, and what’s coming this year.

Despite the ongoing pandemic, the housing market has remained strong, and this looks to continue throughout 2022. As of December 2021, the current average house price in the UK is £276,091. With a year on year average increase of £24,500, 2021 saw the strongest yearly cash rise since March 2003. Regionally, we can see the rise in house prices is unbalanced, with some areas performing much better than others.

In 2021, the overall UK house price rose by 9.8%. Wales showed the highest increase, with an overall house price growth of 14.5%. Northern Ireland and Scotland follow closely behind, with 10.6% and 9.7% house price growth through the year respectively. However, London’s house price growth did not see the same kind of figures. At just 2.1% growth through 2021, the report highlights that, whilst the market performed well, that’s not to say that the pandemic hasn’t had a significant impact on it. Working from home has become an increasingly normal part of our work week, and we’ve seen how commuters are reverting to moving further from the capital into more spacious homes and areas.

Russell Galley, the managing director of Halifax, made several comments about why we saw this growth. A key point that Galley makes is that, whilst the UK was technically ‘locked-down’ for the first half of the year, the average house price reached “new record highs on eight occasions”. He goes on to explain this: “The lack of spending opportunities afforded to people while restrictions were in place helped boost household cash reserves [… while] 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”. However, it’s the lack of availability of property and low-interest rates that also helped to keep the market going, but has led to the highest level of property value inflation since July 2007, at 9.8%.

The government’s attempt to curb inflation (5.4%) with the Bank of England Base Rate (BBR) rise in late December to 0.25% is a starting point for where the market looks to go in 2022. “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”. Industry experts predict further interest rate increases further throughout the year, with brokers stressing the importance of remortgaging now if you can.

Moving cautiously into 2022, it’s important to note that the market is still somewhat subject to the pandemic. But if 2021 has taught us anything, it’s that this doesn’t have to be a negative thing for landlords. Russell Galley’s expectations show that the house prices will “maintain their current strong levels” despite the slowing of price growth, meaning the capital return on property investment will remain steady. And with a sustained lack of affordable housing, demand for rental property isn’t about to diminish either.


If you’d like to speak with an expert about your plans for your property investments for 2022, get in touch today. Call 0345 345 6788 or email enquiry@mortgagesforbusiness.co.uk.



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