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UK Housing Market 2021: A Year of Record-Breaking Growth

2021 has been an eye-opening, frenetic and ultimately, polarising year for the UK housing market.

Going down in history as one of the busiest periods in recent years, the housing sector has seen a flurry of activity throughout 2021. This year the property market has delivered record-breaking levels of growth despite a chronic lack of supply and the ongoing health and economic uncertainties posed by Coronavirus and the recent Omicron variant.

As we approach the end of the year, now is as good as a time as ever to reflect on the year that has been 2021 and look forward to what is in store for 2022.

A Year Like No Other

When analysing the UK housing market in 2021, it is -somewhat ironically perhaps- impossible to do so in isolation. To fully understand the current market, you must cast your minds back to 2020 and, in particular, the effective shutting down of the property market in March.

Following the government’s decision to enter a national lockdown, the housing market understandably froze as a consequence. Unable to move forward and close deals, the future of the UK housing sector and those employed by it seemed mired in uncertainty.

Thankfully, the light at the end of the tunnel came following the reopening of the housing market two months later in May. However, the most significant moment of the property market in 2020 was Rishi Sunak’s proposal for a Stamp Duty Holiday.

Introduced on the 8th of July 2020 and initially running to the 31st of March 2021 before being conditionally extended to the 30th of September 2021, the Stamp Duty Holiday saw a mesmerising surge in activity as buyers rushed to save thousands of pounds in fees from their property moves.

Fuelled by the Stamp Duty Holiday and the mandate from the Government to Work from Home where possible, larger, more rurally-located homes were increasingly being sought after with many buyers seeing the reduction in stamp duty fees and the absence of a daily commute as the most opportune time to move into their dream home.

Ben Davidson, Founder and Managing Director of Davidson Estates

Ben Davidson (pictured right), Founder and Managing Director of the Birmingham-based estate agency Davidson Estates, reflects: “In 2021, we saw a lot of buyers deciding to move and both open space, or access to nearby parks etc., are just as important as the ability to work from home comfortably.

“In the early days of Working From Home, people perched in the spare room or worked on their laptops on the kitchen table. We are now seeing a more focused approach to how and where someone will work from home – efficiently, effectively and in comfort.”

While many theorised that the end of the Stamp Duty Holiday would cause havoc, prices within the market have only continued to get stronger from then on despite the number of transactions rapidly decreasing.

Data from the HMRC’s monthly property transactions shows that UK home sales dramatically decreased by 52% in October 2021.

In October, only 76,930 sales took place, while September saw sales of 160,220. Year-on-year, house sales dropped 28.3% lower than October 2020.

In addition to the number of sales, the latest Bank of England figures shows that the number of mortgages approved to finance house purchases fell for a fifth consecutive month in October 2021, to 67,199. Year on year, the October figure was 32% below that of October 2020.

Records are Made to be Broken

Whilst the number of sales might be down, house price records were continually shattered throughout 2021 with our regularly featured Halifax House Price Index showing record-breaking numbers practically every month.

According to the latest, Halifax House Price Index house prices in the UK as of November 2021 hit £272,992, a figure that has risen by 8.2% compared to this time last year.

Beyond the average UK house prices reaching new heights, regional prices also saw up to 14.8% gains, with formerly cheaper areas becoming increasingly less affordable.

In the historically affordable Wales, house prices rose to an average of £204,148. Meanwhile, house prices also saw gains by 11.4% in the North West.

Unsurprisingly, in London, where affordability was already a major concern, the growth in house prices was minimal, yet the average asking price of £521,129 still dwarfed the national average.

Source: Halifax House Price Index – November 2021
Mark Edworthy, Founder at Burrington Estates


Reflecting on the health of the housing market in 2021, Mark Edworthy (above), CEO at Burrington Estates, says: “We believe the high demand, low supply dynamic in UK regional housing supports a continued strong market. [However,] we would actually prefer for price growth to be slower and more enduring as it has put extreme pressure on new land prices and material prices and availability.”


Affordability & the Lack of Supply

As touched on above, one of the major characteristics of 2021 has been the diminishing number of affordable homes available on the market.

Since the onset of the pandemic in the UK in March 2020, house prices across the country have risen by an average of £33,816. In real terms, this means that the average cost of buying a home has been steadily increasing by roughly £1,691 per month.

The rising house prices have been sighted as a primary cause in the unprecedented housing crisis which impacts approximately 17.5 million people in the UK

Despite the attention-grabbing asking prices, there is a growing concern about the lack of supply within the housing sector.

Ben Davidson believes that more must be done on a planning level, stating: “The demand for new homes, whether apartments or houses, is there, and we can sell what is available, but therein lies the problem.

“Too many sites are lying fallow and given that it can take three years until someone can move into a new development, there are not enough new properties in the pipeline.”

The sentiment over a lack of homes is also echoed by leading planning consultancy Lichfield’s, who stated earlier in the year that the government needs to take urgent action to significantly increase the number of housing developments being granted planning permission if it wants to hit its targets of 300,000 additional homes per year across England.

Ritchie Clapson, Co-Founder of PropertyCEO

Ritchie Clapson (right), veteran property developer and co-founder of the national property development and training company PropertyCEO, believes that: “Looking forward, brownfield development is going to be key [to solving the lack of supply]. We currently have the scope to build over a million new homes on existing brownfield sites.

Ritchie adds: “A key part of the housing solution will come from small-scale developers; individuals who are able to take on projects deemed too small by the larger housebuilders. Their ability to use permitted development rights to convert unwanted commercial buildings will significantly enhance brownfield redevelopment, as it ensures that smaller sites won’t get passed over”

While building more homes will, of course, increase the number of available properties on the market, the real key to solving the UK’s lack of supply lies with addressing the elephant in the room, affordability.

Affordability is a crucial part of making Boris’ previously touted idea of turning ‘Generation Rent’ into ‘Generation Buy’ a reality, yet as noted by Ritchie, the eye-watering prices for some regions in the UK “highlight the need for more affordable housing”.

Ritchie adds that the figures presented by Halifax’s November House Price Index “underline the importance of the planning reforms currently being reformulated following Michael Gove’s recent appointment as housing secretary.”

Michael Gove has reportedly ordered a complete rethink of the originally proposed Planning Bill, which is now scheduled to be reviewed by parliament early next year. However, what is unclear at the moment is how much will have changed in the reforms and what compromises were made to appease both developers and voters following initial voter condemnation of the original proposals.

What will the Housing Market Look like in 2022?

While it is too early to definitively say what the UK housing market will look like in 2022, the rapid rise of the Omicron variant in the UK again poses serious questions to the health of the general public, businesses and the broader economy.

Halifax Managing Director Russel Galley believes that next year could see the UK housing market set to face “greater uncertainty than has been the case for quite some time”.

Judging by the (currently) rising case numbers and increase in hospitalisations, Russel’s prediction of uncertain times ahead is a grim reminder that the road to a COVID-free society won’t be as simple as first thought.

2022 -and at the very least, the early parts of the year ahead- won’t be as plain sailing as some would have predicted a few months ago and will again be dominated by the struggles of yesteryears.

However, despite the many obstacles on the horizon, it’s important to remember that the housing market has proven to be relatively resilient even in the face of unprecedented challenges.

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