Halifax expects house price growth to ‘slow considerably’

Mortgage lender Halifax has confirmed that house prices moved up by around 10 per cent last year but expects the rate to ‘slow considerably’ in the months ahead.

The mortgage lender’s latest house price survey puts the actual 2021 figure at 9.8 per cent, meaning that by its calculations house prices went up by an average of over £24,500 last year – the largest annual cash rise since March 2003.

Even though house prices climbed by 1.1 per cent in December, the sixth month in a row to notch up increases, Halifax expects house price growth to slow next year.

‘The housing market defied expectations in 2021, with quarterly growth reaching 3.5 per cent in December, a level not seen since November 2006’, said managing director Russell Galley.

‘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. The extension of the Government’s job and income support schemes also supported the labour market and may have given some households the confidence to proceed with purchases’. 

But, said Galley, ‘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. Our expectation is that house prices will maintain their current strong levels, but that growth relative to the last two years will be at a slower pace. However, there are many variables which could push house prices either way, depending on how the pandemic continues to impact the economic environment’.