With buyers hunting for bigger homes during the coronavirus pandemic, detached property prices rose by 10% over the year.
The average UK house price increased by 8.5% to a record £252,000 in December – the highest annual growth rate for more than than six years.
The hike, up from 7.1% in November, represents the largest yearly rise since October 2014, according to the Office for National Statistics (ONS).
With buyers hunting for bigger properties during the coronavirus pandemic, which saw a surge in home working, detached property prices rose by 10% in the year to December.
This was double the 5% rate at which the average price of flats and maisonettes increased.
The ONS figures show average house prices increased over the year in England to £269,000 (8.5%), in Wales to £184,000 (10.7%), in Scotland to £163,000 (8.4%) and in Northern Ireland to £148,000 (5.3%).https://a25dbf63dbf9e1f4b7a864b2dd50a11e.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.htmlAdvertisement
In England, the North West had the highest annual growth in average house prices (11.2%), while London recorded the smallest increase (3.5%).
London’s average house prices remain the most expensive of any region in the UK at £496,000 in December 2020.
The North East continued to have the lowest average house price in England, at £141,000, and has been the final English region to record prices passing their pre-economic downturn peak of July 2007.
The ONS report said: “Recent price increases may reflect a range of factors, including pent-up demand, some possible changes in housing preferences since the pandemic and a response to the changes made to property transaction taxes across the nations.”
The stamp duty holiday is due to end next month and there have been concerns some buyers may pull out if they do not meet the deadline.
The sales levy applies in England and Northern Ireland, but similar property tax holidays have been applied in Scotland and Wales, which are also set to finish on 31 March.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The housing market continued at full speed ahead as we approached the end of the year.
“With demand from buyers for more space – both inside and out – outstripping supply, prices inevitably edged upwards.
“Detached houses continue to be the property of choice, with price growth of flats continuing to lag.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Evidence already is accumulating that prices will fall back this year.
“Prices surged in the second half of last year in response to the boost from the temporary increase in the threshold for stamp duty, and strong demand from households seeking larger properties due to the pandemic.
“Note that prices for detached properties rose by 10% year over year in December, double the 5% increase for flats.
“But timelier data suggest that the official measure of prices, based on transactions, will dip when the threshold for stamp duty returns to £125,000 at the end of March, from £500,000 at present.”