The latest house price survey from lender Halifax shows that UK house prices rose at their fastest rate last year in any calendar year since 2004.
Different property preferences during the pandemic, including demand for more indoor and outdoor space, led to a higher number of property transactions, driving up prices.
Buyers also took advantage of the stamp duty holidays and low mortgage rates last year.
As a result, average house prices rose by 9.8% in 2021. It was the best year for house price growth since 2004 when growth was 12.5% in twelve months.
Due to this growth in 2022, the average UK property was worth £276,091 in December, adding around £24,000 in a year.
Looking ahead, house price growth is expected to slow as interest rates rise and the living cost.
Russell Galley, managing director of Halifax, said that the housing market “defied expectations” in 2022, saying:
“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 home-working, will have encouraged buyers to bring forward home purchases they’d maybe planned for this year.”
Galley warned that the prospect of rising interest rates this year and a higher cost of living placing the squeeze on household budgets could slow house price growth “considerably”.
As always, house price growth in 2021 was different in the country's various regions, with the best performances last year taking place outside of London.
Changing property preferences meant greater demand for homes in coastal and rural parts of the country.