UK property owners have benefited from a sharp rise in house prices during 2021.
The market saw a 7.1% annual rise this year, according to the latest data from Zoopla, with prices rising by an average of £16,000.
The total value of the UK housing market was up £670bn in 2021 alone, taking it to a total of £9.5tn, while the average home now has a market value of £240,800 compared to £224,800 a year ago.
There have been 1.5 million property transactions since 1 January, resulting in the highest number of sales since before the financial crisis, data showed.
House prices in nearly every region of the UK have risen this year by more than in 2019 and 2020 combined.
Here are a few factors that have driven the housing boom over the last 12 months:
Stamp duty holiday
The government’s stamp duty holiday was a tax break designed to prop up the housing market, and help consumers as the economy contracted during the COVID-19 lockdowns.
It was extended from 31 March 2021 to the end of June and once more, tapering from June to the end of September, as people rushed to market.
Housebuyers could have cashed in on savings of up to £15,000 if they bought at the right time this year.
The break caused a frenzy in the market, with many using it as an excuse to make long-awaited moves or buy for the first time. However, some said that with climbing house prices over the past year the discount was quickly priced in and that it "distorted" the market.
Watch: What do stamp duty cuts mean for buyers and house prices?
Race for space
The pandemic has led to a search for space among British homeowners, with people looking to snap up property with more room thanks to a rise in remote working.
Buyer demand shaped the property market this year, running an average of 15.7% higher than 2020 levels. Buyer activity culminated in June 2021, when more people moved into a new home than in any month since 2005.
“Such a busy market eroded the number of homes available to buy, as properties were being snapped up so quickly,” said Grainne Gilmore, head of research at Zoopla.
“This imbalance between demand and supply has put upwards pressure on prices."
According to the Royal Institution of Chartered Surveyors (RICS) last month, surveyors who operate in the residential sales and lettings markets saw consumers’ willingness to reduce their home’s carbon emissions rise.
It found that around one-third of surveyors saw an uptick in demand for energy efficient homes, however, cost was the main barrier for current homeowners to make energy efficiency improvements.
More than three-quarters saw little to no impact of having an energy efficient property on sale prices, however, 62% of respondents anticipated that demand would improve over the coming three years.
The survey sample covered a total of 510 branches coming from 295 responses.
The UK economy is recovering better than initially expected, and employment and wages are booming, so much so that there has been a record number of vacancies in the country.
First-time buyers will also continue to benefit from the government’s help-to-buy scheme until April 2023, meaning people have more money and support for housing.
However, the Bank of England (BoE) has recently raised interest rates from record lows of 0.1% to 0.25%, meaning mortgage rates could be affected.
Watch: Will interest rates stay low forever?
Interest rates have been so low in recent years that locking in has been attractive. Since 2019, 96% of new mortgages for owner-occupiers have been taken on fixed rates.
In total, 74% of outstanding mortgages are fixed, and borrowers will not see any immediate impact from the change. Experts expect the market to remain robust, with the threat of a rate rise not set to knock the positive price trends seen this year.
As people were told to work from home where they can, London saw an exit from renting and purchasing in the City to an uptake on the outskirts of the M25 and further afield.
With the economy beginning to recover from the pandemic, there are now more people heading back into the capital.
Guy Gittins, chief executive of estate agent Chestertons said: “We’ve already seen the capital start to awake from its pandemic property market slumber with a return to the office and the growing demand from foreign buyers all helping to cultivate early signs of house price prosperity.”
Chestertons saw a 12% uplift in buyer enquiries in London this November compared to the same month last year.