UK house price inflation accelerated sharply at the end of 2021, but the pace is set to slow this year amid expectations of further interest rate hikes and increasing pressures on household budgets, results of a survey by the Lloyds Bank subsidiary Halifax and IHS Markit showed Friday.
The house price index rose 9.8 percent year-on-year following an 8.2 percent increase in November, Halifax said. The latest house price inflation figure was the highest since July 2007.
House price growth was driven by a lack of available homes for sale, and historically low mortgage rates, Halifax said.
Compared to the previous month, house prices rose 1.1 percent, same as in November.
The average UK property price hits a new record high of GBP 276,091 in December.
House prices grew more than GBP 24,500 in December, which is the biggest annual cash rise since March 2003, Halifax said.
Quarterly growth reached 3.5 percent in December, a level not seen since November 2006.
In 2021, the average house price reach new record highs on eight occasions, despite the UK being subject to a ‘lockdown’ for much of the first six months of the year, Halifax said.
House price growth is expected to slow in 2022, the agency added.
“Our expectation is that house prices will maintain their current strong levels, but that growth relative to the last two years will be at a slower pace,” Halifax Managing Director Russell Galley said. “However, there are many variables which could push house prices either way, depending on how the pandemic continues to impact the economic environment.”