House prices like COVID cases end the year on a record high

Published 30th of December, 2021

Graph chart showing UK house prices December 2021 twindig Housing Hailey

The Nationwide published their house price index for December this morning

What they said

Average UK house prices £254,822
House prices increased by 10.4% or £23,902 during 2021
The strongest calendar year for house price growth since 2006

Twindig take

House prices like COVID cases end the year on a record high. According to the Nationwide house prices are now 16% higher than they were before the pandemic struck in 2020, an increase of more than £38,000.

Demand has continued to outweigh supply following the end of the stamp duty holiday and this imbalance (more buyers than sellers) continues to push house prices up.

Can house prices continue to rise?

Incredible as it sounds, we believe that they can. Over the last 25 years, house prices have increased, on average, by 5.9% and house prices have only fallen in three of those years: 2008, 2009 and 2011

graph chart showing annual uk house price inflation 1996 to 2021 twindig Housing Hailey

We do not expect 2022 to be as strong a year for house prices as 2021 has been, but we estimate that house prices will rise by 5% next year. We may not have the benefit of a stamp duty holiday, but the demand and supply imbalance is likely to be a feature of 2022, in our view.

If we look back over the last 90 years there have only been 16 years where house prices have fallen during the year, that is less than once every 5 years. Historically at least therefore house prices go up more than 80% of the time and average house price inflation over the last 90 years 8.6%

graph chart showing annual uk house price inflation 1931 to 2021 twindig Housing Hailey

Not all houses are equal

Wales saw the highest house price growth in 2021 up 15.8% (the first time it has topped the Nationwide charts since records began in 1973 whilst London saw the weakest house price growth of just 4.2%.

Affordability another casualty

The Nationwide’s December house price report demonstrates that affordability has worsened over the last decade especially in the south of the country. Affordability is most stretched in London, the South East and the South West

What will happen to house prices next?

Twindig believes that house prices will rise by 5% next year, slightly below the 25-year average house price growth of 5.9%. In our view, the market fundamentals remain strong, but house price growth unaided by the stamp duty holiday will not maintain double-digit growth. You can see our full housing market forecasts click the link: Twindig's housing market forecasts 

Housing Hailey

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