Average UK house price growth increased by 8.5% during 2020, while prices in the north-west of England rose by 11.2%. What’s behind this growth?
Over the year to December 2020, the average UK property price increased by 8.5%, according to the House Price Index by the Office for National Statistics. This is the highest annual growth rate since October 2014. In December, average house prices stood at £252,000. This is a record high figure and a whopping £20,000 higher than in December 2019.
During 2020, average house prices even rose by 11.2% in the north-west. This is the highest annual growth in England. And in the coming years, the north-west is expected to continue to see strong house price growth.
What’s behind the rise in house prices?
Throughout the past few years, there was a general slowdown in UK house price growth. This was mainly driven by house price dips in the south. However, the beginning of 2020 saw an up-tick in annual house price growth across the UK.
In March 2020, the housing market ground to halt for a few weeks during the first lockdown to help curb the spread of the COVID-19 pandemic. When the sector opened back up in May, pent-up demand started to be released.
In July, Chancellor Rishi Sunak announced the temporary stamp duty holiday, which could save homebuyers up to £15,000 and is set to end on 31 March 2021. This led to unprecedented demand and a property boom throughout the rest of 2020.
With strong demand, there was a lack of supply, which further put upward pressure on house prices. Additionally, during 2020, borrowing costs were at record lows. This led many buyers and investors to lock in competitive interest rates.
On top of that, with successive lockdowns, people have spent more time at home in the past year. And more people have been working from home. This caused people to re-evaluate their property priorities and led many to look for larger properties with space for a home office and access to a garden or balcony.
Strong demand in the north-west
Demand in the housing market has been particularly strong in the north-west. Data from Zoopla even revealed house price growth in the north-west is currently at a decade high. In the past year, Liverpool and Manchester even saw the strongest house price growth across UK cities with a 6.3% and 6% increase respectively.
The north-west continues to show its resilience. With homebuyers and investors looking for larger properties, the north-west is proving to be a particularly appealing region to get more for your money. And this shift in property preferences is expected to remain even after the pandemic is over, which will likely cause the more affordable north-west to remain in demand.
Savills predicts that the north-west will be home to the strongest house price growth in 2021. The national estate agency predicts prices to rise by 8.5% in the region. Last year, Savills also revised its five-year property price predictions. The north-west is expected to lead the way with a 24.1% increase in prices by 2025, compared to the UK-wide projection of 15.1%.