The average house price in England and Wales now stands at £326,762, establishing a new record level for the fifth consecutive month following heightened and unseasonal activity during December.
According to the latest market report from e.surv (formerly the LSL Acadata House Price Index), the average price of a home in England and Wales during December was 7.8% up against the same period a year earlier - a rise of this size not seen since 2016.
e.surv also revealed that average house prices have seen a 51% increase over the last ten years - rising from £216,000 in December 2010 to £326,500 in December 2020. However, when factoring in the 19% movement seen in the CPIH index over the same period, house prices in real terms have increased by 32% over the last ten years.
The major drivers for the current rise in house prices are the pent-up demand built up in late 2019 due to the prolonged Brexit negotiations, the historically low-interest rates which have made homes more affordable and of course the temporary stamp duty holiday which has incentivised purchasers to secure a deal prior to its planned termination at the end of March 2021.
Richard Sexton, director at e.surv, comments: “During 2020, large numbers of people across the UK were confined to their houses for long periods of time, as we battled the pandemic. Over the year many people were forced to adapt their homes to function as offices, schools and nurseries. This increased emphasis on where we live and where we spend so much of our lives undoubtedly helped focus many people’s minds on the property market.
“This increased focus was reflected in the types of property that were most sought after in 2020. Larger, typically more expensive, properties with more outdoor space became even more highly prized, which in turn increased the price of the average transaction.
“Indeed, prices rose rapidly over much of England and Wales in 2020, with the average house price in December up 7.8% on the previous year. This is the highest annual increase since 2016, though it is worth noting that most of this growth took place in the last six months of the year as pent-up demand was released by more relaxed coronavirus restrictions.
“The market was further stimulated in July by the introduction of the Stamp Duty holiday, which is still set to last until the end of March 2021 and continues to fuel activity in the market.
“Taking a longer view, average house prices in England and Wales have increased 51% over the last decade. Even examining house price growth in the context of this time frame, though, 2020 still stands out.
“It’s important to remember that the pandemic which produced such an unusual year is very much still with us. Everyone involved in the property market must continue to operate in a responsible manner, making use of technology where possible to support the industry while putting safety first.”