AVERAGE house prices reached a record high of £250,000 in November as North-East prices, the country's lowest, surpassed their previous peak. 

Experts warn the industry is facing a "cliff-edge" due to Covid measures, such as the stamp duty holiday, introduced by the government. 

Across the whole of the UK, property values increased by 7.6 per cent over the year to November 2020, marking the highest annual growth rate since June 2016.

The Office for National Statistics (ONS), which released the figures, said the average house price in London surpassed £500,000 for the first time in November 2020. The typical property price in London lifted to a record high of £514,000.

London and Yorkshire and the Humber had the joint highest annual house price growth in England, with average prices increasing by 9.7 per cent in the year to November 2020.

House prices in the North-East also finally surpassed their previous pre-economic downturn peak in November 2020, meaning their highest price before a recession, for example. 

The North-East continued to be the English region with the lowest average house price, which stood at £140,000 in November 2020. But this was higher than the previous peak of £139,400 recorded in July 2007.

Recent price increases may reflect a range of factors including pent-up demand, some possible changes in housing preferences since the coronavirus pandemic started and a response to the changes made to property transaction taxes across the nations, the ONS said.

Two London boroughs recorded annual price growth of more than 20 per cent. They were Kensington and Chelsea (28.6 per cent) and Brent (23.9 per cent).

The sharp annual price increase in Brent is partly caused by prices having fallen in the borough a year earlier, the report said.

Average house prices increased over the year in England to £267,000 (a 7.6 per cent annual increase), Wales to £180,000 (7.0 per cent), Scotland to £166,000 (8.6 per cent) and Northern Ireland to £143,000 (2.4 per cent).

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Come December’s data, the average property price will have likely broken through the £250,000 barrier.”

He said lenders are working “flat out” to help get deals already agreed completed before the end of March.

Mr Harris continued: “That said, there is still good availability of credit, despite demand, with competitive rates and more choice at 90 per cent loan-to-value.”

But Samuel Tombs, chief UK economist at Pantheon Macroeconomics said: “The scenario in which house prices reverse some of their recent gains this year is clear to see.”

He said the eventual withdrawal of the furlough scheme, mortgage payment holidays and the return of the stamp duty threshold to its former level “likely would leave house prices about 2 per cent lower by the end of the year than at present”.

Mr Tombs added: “Most of the recent rise in mortgage rates reflects banks’ repricing for the greater risks of lending in the current environment and so likely will persist, even if demand for mortgages eases. That said, Government policies are not fixed.”

Nick Leeming, chairman of estate agent Jackson-Stops, said: “The market was firing on all cylinders in November and our own branch data reflected this, with completions across our national network up 71 per cent in November in comparison to three months prior.

“I do urge the Chancellor to consider how to ease the market out of the stamp duty holiday to avoid the cliff-edge government has created.”