Average UK property prices rose 7.5% during the pandemic

According to the latest ONS – Office for National Statistics house price index, average UK house prices rose 7.5% in the year to January 2021, up from 8.0% in December 2020. The Office for National Statistics index is highly credible because it is the one that reflects the data used with a huge number of properties in the UK.

Average home prices rose over the year in England to £267,000, an increase of 7.5%. In Wales, prices rose to £179,000, up 9.6%. In Scotland to £164,000, up 6.9%, and in Northern Ireland to £148,000, up 5.3%.

The Northwest of England is the region with a 12.0% average annual increase in home prices.

Clo Atkinson, managing director of Mortgage Engine, said: “The rise in house prices in January reflects a busy start to the year for the market, which has become busier due to the recently extended Stamp Duty vacations.

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“The numbers are also further evidence that the housing market has fully adapted to operate during the pandemic, even in the face of isolation. Brokers and lenders are maintaining record levels of activity while managing tight restrictions and an increase in the number of borrowers affected financially by the virus.

“Much of this success is due to the adoption of a variety of technology solutions, from remote home viewing to the increased use of automated valuation models (AVMs). With the support of technology, lenders have been able to provide for their clients throughout the pandemic.

“Technology has provided the market with versatility and resiliency, and that’s one reason why the industry needs to adopt technology solutions sooner rather than later. With high real estate prices and a good market, it’s time for the industry to invest in this technology now instead of catching up later.”

Anne Claire Harper, executive director of asset management firm SPI Capital, added: “This data is relevant because it shows a more complete picture than other home price indexes. This is important because, as the data over the past year show, headline news about home price growth both reflects and influences buying and selling decisions.

“Real estate is emotional, and positive headlines encourage buyers and sellers to hurry up to avoid” the fear of missing out. This, in turn, contributes to rising home prices.

“Growth of 7.5% for the year to January 2021, slightly below the unusual 8% for the year to December 2021, is significant, particularly when compared to many other more volatile or low-yielding assets. The leader in home price growth was the Northwest, which rose 12%, while home prices in London rose “only” 5.3% (still an impressive growth rate).

“The West Midlands saw the lowest increase in house prices in England, at 4.7%. The trend in demand for detached and semi-detached homes continued, with growth rates of 8.6% and 9%, respectively, followed by terraced homes.

“Overall, several important factors influenced the rise in home prices last year. Home prices rose because of a temporary reduction in stamp duties and cheap credit as a result of very low interest rates, which together give buyers a “discount.” A steady release of pent-up supply and demand, a desire for improvement and a change in lifestyle requirements among existing homeowners; and a “flight to safety” as people want to keep their money in stable assets with low volatility in times of uncertainty.

“These trends have been countered by decreased appetite from international buyers, who have been hurt by travel restrictions and nervous about Brexit and COVID-19. We are now seeing a return of confidence from international buyers, which is likely to lead to a further increase in house prices.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The housing market continued to grow in January, although annual growth was down slightly to 7.5% from 8% in December. That was before the chancellor announced the stamp duty vacation extension, so there may have been buyers who gave up on buying, believing they were too late to take advantage of the extended benefits.

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