The Office for National Statistics (ONS) revealed that the average price of a house in London dropped from a record high of £514,000 in November to £496,000 in December. London saw average house prices decrease between November and December 2020, while this time last year they increased by £10,000. London’s average house prices remain the most expensive of any region in the UK at an average of £496,000 in December 2020.
Average house prices across the UK increased by 8.5% over the year to December 2020, up from 7.1% in November 2020, to stand at a record high of £252,000, ONS said. This is the highest annual growth rate the UK has seen since October 2014. 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%).
While London saw the lowest annual growth in average house prices (3.5%), the North West was the English region to see the highest growth (11.2%). The ONS index 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.”
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.”
