U.K. House Prices Surged Last Year at Fastest Pace Since 2004

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U.K. house prices rose for a sixth month in December, capping the strongest year for residential property since 2004, according to Halifax. 

The average price rose 1.1% to a record 276,091 pounds ($374,000), the mortgage lender said Friday. In 2021 as a whole, values jumped 9.8%

Housing has defied the plight of the wider economy since the pandemic began, boosted by tax incentives, a shortage of stock and demand for properties outside urban areas with room to work from home. But momentum is set to slow this year as stretched affordability, rising interest rates and a looming cost of living surge put household budgets under strain. 

The “race for space” took its toll on the London housing market last year, where values that are around double the national average edged up just 2.1%. That's the smallest increase of any region. 

By contrast, prices in Wales surged 14.5% as buyers snapped up cheaper properties in rural areas. 

“The prospect that interest rates may rise further this year to tackle rising inflation and increasing pressures on household budgets suggest house price growth will slow considerably,” said Russell Galley, managing director at Halifax. 

• Year-on-year growth in December was the fastest since July 2007
• A typical property added more than 24,500 pounds over the past 12 months, the biggest gain in cash terms since 2003
• In England, the strongest-performing region was the North West, followed by the South West

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