Covid UK: House prices soared by £17,000 last year to average £249,000 in January

Average house prices soared by £17,000 last year to an average £249,000 in January as the market defied coronavirus lockdowns.  

In the second half of 2020, the reopening of the housing market following the easing of coronavirus restrictions unleashed a wave of pent-up demand as households moved to bigger homes outside big cities.

Emboldened by the Chancellor’s stamp duty holiday, the market has experienced a mini-boom, marked by deep-pocketed buyers escaping to the country and driving prices in some popular villages up substantially.

Across the UK, the average property value in January was down from a record high of £250,000 in December, the Office for National Statistics (ONS) said. However, the average house price in January was still £17,000 higher than in January 2020. 

Annual house price growth was slower in January than it had been in December. UK average house prices increased by 7.5 per cent over the year to January, compared with an 8 per cent increase in December.

In England, average house prices increased over the year to £267,000 (a 7.5 per cent annual increase), in Wales to £179,000 (9.6 per cent), in Scotland to £164,000 (6.9 per cent) and in Northern Ireland to £148,000 (5.3 per cent).

Within England, house prices in the North West recorded the highest annual growth in average house prices – at 12 per cent. It marked the highest annual growth rate the North West has seen since June 2005.

The West Midlands had the lowest growth at 4.7 per cent, while average house prices in London increased by 5.3 per cent to January, up from 4.5 per cent in December.

London’s average house prices remain the most expensive of any region in the UK, at an average of £501,000 in January.

The ONS said recent price increases may reflect a range of factors including pent-up demand, changes in housing preferences since the pandemic and a response to the changes made to property transaction taxes, such as stamp duty, across the nations.

Reflecting the demand for more space, the average price of detached homes increased by 8.6 per cent in the year to January, in comparison with flats and maisonettes increasing by 2.6 per cent over the same period.

In early March, it was confirmed that in England and Northern Ireland, a current stamp duty tax holiday would be extended until June 30 after which the threshold will decrease to £250,000 until September 30.

From October 1, the stamp duty thresholds will revert back to what they were before the stamp duty holiday started last July.

The equivalent property tax holiday for Scotland is due to end on March 31. The tax holiday has been extended until June 30 in Wales.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘The housing market continued to be buoyant in January, although annual growth slipped slightly to 7.5 per cent, down from 8 per cent in December.

‘This was before the Chancellor announced the extension to the stamp duty holiday so there may have been buyers who took their foot off the gas in the belief that they were too late to take advantage.’

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: ‘The market was technically open for business (in January), but many sellers weren’t keen to let people traipse through their home, buyers hadn’t yet had the good news of the stamp duty holiday extension, and even when sales were agreed, the same old problems kicked in, with the sales process flowing like treacle.’

Nitesh Patel, strategic economist at Yorkshire Building Society, said: ‘The dash for space continues at pace as buyers snap up larger homes, adding upward pressure on prices.

‘In the past year the price of detached homes has grown by 8.6 per cent compared to 2.6 per cent for flats – three times the rate.

‘Since March 2020, the popularity of detached homes has grown, now accounting for 28 per cent of all home sales, up from 22 per cent. Flats now account for a smaller share at 12 per cent, down from 17 per cent over the period.’

He added: ‘We expect demand to stay at an elevated level relative to supply, and as a result adding further pressure on prices.’ 

The top 10 villages listed by estate agent Savills have all seen average property sale prices rise more than 50 per cent, as demand outweighed supply in locations where homes rarely come up for sale.    

The list of top 10 villages includes Malborough, in Devon’s South Hams, Bisley-with-Lypiatt, Blockley and Shipton-Under-Wychwood, which all benefited from the Cotswold effect, and Brasted, near Kent commuter hotspot Sevenoaks. 

The data compiled by Savills exclusively for MailOnline looked at parishes in England and Wales with the biggest increases in the average price of homes sold. 

It should be noted, however, that as transactions within such limited areas will be low, average local price gains can be much greater than in a broad national index and individual expensive property sales can skew the figures.

While the data analysed parishes – defined as towns and villages – the list only ended up featuring villages. 

This may reflect the trend among buyers for more quiet outdoor spaces and greenery during the pandemic as people have faced repeated lockdowns.

Savills was keen to highlight that the small nature of parishes means that sale numbers are limited – something that has a disproportionate effect on the price increases.

The estate agent explained how that the impressive price increases during the past year did not equate to price growth – and that, rather, they show what has been seen across country markets.

This has been a search for space, with many families upsizing and a search for greenery being a top priority for many buyers.

The list of villages with the biggest increases in the average price of homes sold include Malborough, in South Hams, which has seen a rise of 92 per cent.

The village is near Salcombe and is popular among tourists, with holiday homes located throughout the area. The average price of a property in Devon’s Malborough was £234,366 in November 2019.

Fast forward 12 months to November last year and the average value of a home in the village has risen sharply by 92.1 per cent, to £450,275. 

It is followed by Bisley-with-Lypiatt, in Stroud, Gloucestshire, where the average price of a property has risen from £462,163 to £792,500 during the same 12 months, up 71.5 per cent.

In third position is Brasted, in Kent, with values rising 58.8 per cent, from £697,872 to £1,108,002 in a year. 

Also in the top 10 are Blockley, in the Cotswolds, Wanborough, in Wiltshire, and Boldre, in the New Forest, where the average price of homes sold have risen 55.4 per cent, 51 per cent, and 50.7 per cent, respectively.  

The average price of a property in Britain has risen 2.55 per cent during the past year, or by £7, 600, to £305,397, according to property website Zoopla.

It follows a separate Savills survey that revealed 42 per cent of its 1,100 respondents claimed proximity to a park or open space was one of their top two priorities when looking for a new home a year ago.

This has now risen to 55 per cent, driving premiums for proximity to National Parks, areas of outstanding natural beauty and other large green open spaces.

Frances Clacy, of Savills, told MailOnline Property: ‘Over the past year, there’s been a significant increase in demand for property in villages as many have looked to upsize for more inside and outside space.

‘This is the opposite to the trend we’d seen over the period since the credit crunch when towns and cities tended to outperform, which means in many cases, villages now look good value in comparison and the ability to get more for your money has further increased buyers’ desire for village life.’ 

Savills used data covering November to November as this was the most up to date Land Registry figures it had access to at the point of doing the analysis.