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PwC comments on ONS December house price figures

16/02/22

UK house prices continued to rise strongly in December 2021, pushing average house price growth in 2021 to the highest rate since 2007

Jamie Durham, economist at PwC UK, said:

“Data released this morning shows that the UK housing market remained buoyant in December, with prices 10.8% higher than in December 2020, adding around £27,000 to the average home.

“On an annual basis, house prices increased around 10% on average in 2021 - the highest rate of growth seen since 2007.

“The continued strong rate of price growth across the country despite the end of the stamp duty holiday is driven by a number of factors. The pandemic has caused a shift in preferences towards properties with more space, which has driven increased demand while supply has been constrained. There has also been an accumulation of consumer savings during lockdowns over the last two years while borrowing costs have remained relatively low.

London once again saw the slowest price growth of all regions, with prices rising 5.5% compared to the year before. This is in part due to higher prices in the capital, with the average home now costing more than £520,000, which limits affordability and so price growth.

“While there remains considerable uncertainty in the outlook for the market, we do expect prices to continue to rise in 2022 but at a slower rate than seen in 2021 as conditions start to normalise.

“Going into 2022, the most significant risk to the outlook is ongoing pressure on the cost of living. Figures also published this morning show prices increased 5.5% in the year to January, which is the highest rate in nearly 30 years. We are already seeing this weigh on consumer confidence across regions and social groups. This may feed through to willingness to make major financial decisions like buying a home over the coming months. The Bank of England may also move to increase interest rates further and faster over the coming months to try to control inflation, which could limit affordability and reduce overall demand."

 

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