House prices see biggest rise in 14 years in 2021, Halifax says

UK house prices jumped last year as buyers sought more space during lockdown and took advantage of low-cost borrowing and stamp duty holidays.

Prices increased by 9.8% during 2021, according to the Halifax, marking the biggest annual increase since 2007.

The lender said the average UK property price hit a new record high of £276,091 in December.

However, growth is expected to slow this year due to higher mortgage rates and a squeeze on household incomes.

The UK's housing market "defied expectations" last year, said Russell Galley, managing director at the Halifax.

"In 2021 we saw the average house price reach new record highs on eight occasions, despite the UK being subject to a 'lockdown' for much of the first six months of the year.

"The lack of spending opportunities afforded to people while restrictions were in place helped boost household cash reserves.

"This factor, alongside the Stamp Duty holiday and the race for space as a result of homeworking, will have encouraged buyers to bring forward home purchases they'd maybe planned for this year."

However, he added: "Looking ahead, the prospect that interest rates may rise further this year to tackle rising inflation and increasing pressures on household budgets suggest house price growth will slow considerably."