News
UK house prices up 7.5% in 2020 - highest growth rate for six years
A Nationwide Building Society report shows prices ended the year 5.3% above March levels, despite the pandemic.
Buoyed by new policies and changing behaviours during lockdown, house prices were also 0.8% higher in December than November - the average UK property valued at £230,920.
The report says furlough and Self Employment Income Support schemes have provided vital support for the labour market, while a host of measures helped to keep down the cost of borrowing and keep the supply of credit flowing.
The stamp duty holiday also stimulated demand, bringing forward peoples' home-moving plans.
Lenders also reacted by offering payment holidays to borrowers impacted by the pandemic, helping people stay in their homes rather than potentially being forced to sell.
And despite the likelihood of the stamp duty offer ending, it appears there’s still plenty of buyers looking for bigger and better properties, particularly detached homes.
Mark Harris, chief executive of mortgage brokers SPF Private Clients says that the housing market appears to be making the most of things and with buyers requiring more space - inside and out for the family and to work from home – they’re keen to take advantage of the stamp duty holiday.
"Competitive mortgage rates show no sign of disappearing anytime soon, with lenders most notably returning to the 90% loan-to-value space, providing a further boost for first-time buyers."
What’s next for house prices?
The Nationwide suggest the outlook remains ‘highly uncertain’ and that behavioural shifts as a result of Covid-19 may continue to provide support for housing market activity.
Meanwhile the stamp duty holiday continues to provide a boost by bringing forward home moves.
"The Stamp Duty time limit is creating a false horizon, which will see prices rise even higher in the first quarter of the year," said George Franks, of London-based estate agents Radstock Property.
"Though rising unemployment levels are an obvious threat to property values, demand should remain relatively strong as it still costs less to own than to rent and money is about as cheap as it gets."
He predicted that during 2021, people will continue to change their living arrangements as companies adapt their remote working policies on a more formal basis.
"However, housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March," he warned.
