UK house price growth slowed in January as buyers paused due to new lockdown
UK house price growth slowed in January compared to the previous month as buyers paused due to the introduction of new lockdown measures and uncertainty over the length of the stamp duty holiday, according to the latest official data.
Average house prices increased by 7.5 per cent over the year to January, down from eight per cent in December 2020, data from the Office for National Statistics (ONS) showed.
Across the UK, the average house price in January was £249,000 – £17,000 higher than in the same month of the previous year.
Average house prices increased over the year in England to £267,000, a 7.5 per cent jump.
House prices were up 9.6 per cent in Wales to £179,000, by 6.9 per cent in Scotland at £164,000 and reached £148,000 in Northern Ireland, an increase of 5.3 per cent.
The North West was the English region with the highest annual growth in average house prices, recording a 12 per cent spike , while the West Midlands had the lowest growth of 4.7 per cent.
“Mini boom” continues
PwC economist Jamie Durham said the house price “mini boom” continued in January despite the decline in the rate of the growth “bringing to an end a period of accelerating price growth since July 2020”.
“Looking forward, the extension of the stamp duty holiday is likely to continue to support housing demand and price growth throughout the first half of this year,” he said.
“Pent up demand, a shift in housing preferences towards properties with more space and the accumulation of savings since the initial lockdown have all helped to support housing demand over the last few months and are likely to continue.”
However, price growth is likely to slow even further from recent highs, he said.
Market correction
“As restrictions are eased and life starts to return to normal, it’s possible preferences will start to revert and people will have less time to consider house moves, which may weigh on price growth.
“Average annual price growth is also likely to slow towards the end of the year and into 2022 as prices correct following the end of the stamp duty holiday.”
Gareth Lewis, commercial director of property lender MT Finance, said continued growth was “not sustainable”.
“But this doesn’t matter – price stability, coupled with the right mortgage products being available to borrowers, especially with regard to loan-to-value, is what the market really needs as this allows confidence to grow among buyers and sellers,” he said.
‘This, in turn, will lead to increased transactional flow, which is vital to the overall health of the housing market, rather than price fluctuations.”