The year of Covid ends on a house price high

House prices surged in December to post their fastest growth in six years, according to the Nationwide. 

Prices rose 7.3 per cent year-on-year this month, up from 6.5 per cent in November and 5.8 per cent in October to achieve the highest annual growth since 2014.

Month-on-month, house prices rose 0.8 per cent in December - actually slightly lower growth than 0.9 per cent seen in November.

The average UK house price is now £230,920.

"The furlough and Self Employment Income Support schemes 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” says the Nationwide's chief economist Robert Gardner. 

“The stamp duty holiday also stimulated housing demand, by bringing forward peoples' home-moving plans."

Gardner adds: "The pandemic itself also boosted activity, as life in lockdown and changes to working patterns led many to re-evaluate their housing needs. Our research earlier this year indicated increased demand for less densely populated locations and different property types."

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says the strength of the market is encouraging but it needs to be tempered by the latest virus restrictions.

“These figures reflect strong housing market activity prevailing prior to the latest pandemic lockdown and mobility restrictions. We are in a very different place now as optimism following the initial rollout of a vaccine and the possibility of a Brexit deal has been replaced by realisation that the effects of the virus will get worse before they improve, as well as recognition of the negative impact on confidence and values” he says.

“However, the determination of the overwhelming majority of buyers and sellers to conclude sales agreed prior to Christmas, relatively few price renegotiations and approval of the Oxford/AstroZeneca vaccine bodes well, provided present constraints prove relatively short term. 

“Indeed, present controls may only build up more pent-up demand despite concerns over prospects for the economy and particularly unemployment, together with the ending of the stamp duty holiday and furlough support.”

However, PropTech entrepreneur Anthony Codling, who runs Twindig, feels the bull run could continue.

He says: “Can this positive momentum carry on into 2021? Well, the UK housing market has been far more resilient than we thought possible. If it can come through 2020 with flying colours,  with a healthy dose of 2021 foresight we believe that house prices will rise once again in 2021.”