The average London home price reached £507,230 in the quarter as the 2021 UK property market continued to boom, according to a closely watched index.
Nationwide said its house price index shows an increase of £23,902 in the country’s average home price during 2021 – the largest increase in cash terms in a year so far.
Average UK home prices were up 10.4% annually, with the normal price of a house in the UK at £254,822 in December. Prices were up 1.0% month-on-month in December.
London home prices increased by just 4.2% in the year recorded in the index. This was a lower annual price increase than that recorded in 2020.
The increase represented a £20,668 increase in the value of a property in the capital, and took the average home price of a London home to £507,230.
The index recorded an increase in the average home price in 2021 in “outer metropolitan” London commuter belt areas.
In the category in areas including St Albans, Watford, Maidstone and Reading, the average home price increased by 8.8% to £410,992.
Average home prices in the “outer south east”, which includes Brighton and Hove, Oxford, Thanet and Ashford, rose 11.3% to £329,869.
Nationwide’s chief economist, Robert Gardner, said: “The price of a typical UK home is now at a record high … prices are now 16% higher than before the pandemic at the start of 2020.”
Gardner pointed to the low housing stock in the market as a factor behind the “strong momentum of price growth”.
The Economist warned that the outlook for the housing market in 2022 “remains extremely uncertain”, and pointed out that “housing affordability is already less favorable than it was before the pandemic”.
“It appears that the housing market will slow down next year,” he said, before adding: “The strength of the market took a surprise in 2021 and could do so again in the coming year.
“The market still has significant momentum and changes in housing preferences as a result of the pandemic could continue to support activity and price increases.”