UK average house prices increased by 7.5% over the year to January 2021, new government data revealed, with prices in the North “flying up.”
The North West was the English region which saw the highest annual growth in average house prices (12%), while the West Midlands saw the lowest (4.7%), the Office for National Statistics (ONS) said.
Average house prices increased over the year in England to £267,000 ($366,135), an increase of 7.5%, in Wales to £179,000 (9.6%), in Scotland to £164,000 (6.9%) and in Northern Ireland to £148,000 (5.3%).
Prices for detached homes rose by 8.6% year-over-year in January, greatly exceeding the 2.6% increase for flats, as outdoor space has become more valuable amid the pandemic.
However, house price growth slowed for the first time since July 2020.
Jack Izzard from Rhizome Media noted that “new hotspots are emerging and burning bright… With the North-South divide now in reverse, prices in the North aren't so much levelling up as flying up.”
Meanwhile, managing director of Ascend Properties, Ged McPartlin, noted that it was “reassuring to see that it’s not just London and the South East benefitting, with the North West leading the way with the strongest levels of price growth seen on an annual basis."
"Double-digit house price growth of 12% is huge and really demonstrates the economic momentum building in the region," he added.
“A combination of the temporary increase in the threshold for stamp duty to £500,000, from £125,000, and the increase in disposable income enjoyed by mid-to-high earners from a decline in commuting and other services expenditure, has greatly boosted house prices over the last year,” said Samuel Tombs, chief UK economist, Pantheon Macroeconomics.
The ONS said that over the past four years, there has been a general slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England. The beginning of 2020 saw a pick-up in annual growth in the housing market before coronavirus restrictions were put in place at the end of March 2020.
“Looking ahead, the market dynamics are likely to become clearer. High levels of pent-up demand should continue to apply upward pressure to prices. And without the distorting effect of the Stamp Duty deadline – which has now been kicked down the road – price movements will increasingly be dictated by local market fundamentals," said Izzard.
Meanwhile the latest UK government monthly property transactions data showed there was an almost 50% year-on-year increase in UK residential transactions in February.
Some analysts said this could be due to a rush to meet the stamp duty holiday deadline, although this has since been extended.