2021: HOUSE PRICES GREW AT FASTEST RATE IN 15 YEARS

Tuesday January 4, 2022

Soaring values mean only 10pc of earners in the capital can afford to get on the property ladder

Just 10pc of London earners can afford to get on the property ladder in the capital, as house price growth across Britain rose at the fastest rate since 2006.

Values increased by 10.4pc in the year to December, up from 10pc in November, according to lender Nationwide. Prices hit a record high of £254,822, up by an average of £24,000 in 2021.

This was the largest ever rise in prices in a single year in cash terms. Property values are now 16pc higher than before the pandemic started.

Over the past decade affordability has been most stretched in London, where now only a tenth of earners can afford a typical first-time buyer property, with a 20pc deposit and borrowing four times their income. This has roughly halved in the past decade as wage growth failed to keep up with soaring house prices.

In the South East and South West of England, the top 20pc of earners could afford a home under the same criteria, compared with 70pc in the North and Scotland.

Raising a deposit is still the biggest hurdle to homeownership, according to Nationwide, with the average first-time buyer requiring £88,000 for a 20pc down payment in the capital.

Robert Gardner, of the lender, said the “extremely low” stock of homes on the market was propping up price growth.

He added: “Demand has remained strong in recent months, despite the end of the stamp duty holiday at the end of September. Indeed, in the first 11 months of 2021 the total number of property transactions was almost 30pc higher than over the same period of 2019.”

House prices in Wales have consistently outperformed those in all other regions this year and average property values in the country are up 15.8pc year-on-year. It is the first time Wales has topped the house price charts since Nationwide’s records began.

Northern Ireland and Scotland also recorded double-digit growth of 12.1pc and 10.1pc respectively in the final quarter of this year, whilst house prices in England increased by 9pc.

London, where prices rose by 4.2pc, lagged behind and was the only region where the rate of house price growth in 2021 was lower than the previous year.

Mr Gardner said it was likely that the housing market would slow next year in the absence of a stamp duty holiday and amid high mortgage interest rates.

“The outlook remains extremely uncertain,” he added. “The strength of the market surprised in 2021 and could do so again in the year ahead. It still has significant momentum, and shifts in housing preferences as a result of the pandemic could continue to support activity and price growth.”

Anthony Codling, of property website Twindig, said it was likely house prices would continue to rise in 2022. “Over the last 25 years, house prices have increased, on average, by 5.9pc and only fallen in three of those years: 2008, 2009 and 2011.

“Next year might not be as hot as 2021, but we expect to see house prices rise, on average, by 5pc, around £1,000 per month.”