House prices are seeing the biggest rises since 2014

HOUSE prices grew at their fastest pace in six years in 2020 after the Covid- 19 pandemic sparked a rush for more space and the Government slashed stamp duty.

The average property cost £230,920 this month – £15,000 more than in December last year. The 7.3 per cent annual rise was the highest since 2014.

Every UK region saw prices grow, according to Nationwide’s house price index. However, experts fear the boom will fizzle out by the summer.

The housing market has rocketed since reopening in mid-May after being put on hold for weeks during the first lockdown.

The temporary freeze in sales led to huge pent-up demand, fuelling a boom in the summer, but it also changed the types of homes buyers were looking for.

Estate agents have reported a huge increase in demand for bigger properties in rural and coastal areas since lockdown was lifted.

Buyers are seeking more rooms after a rush in March to set up home offices. Many also want gardens after spending months cramped in inner-city flats.

Robert Gardner, Nationwide’s chief economist, said: ‘The pandemic itself also boosted activity, as life in lockdown and changes to working patterns led many to re-evaluate their housing needs.’

Sales have also been turbocharged by a temporary cut in stamp duty. In July ministers slashed the levy on purchases of up to £500,000 until March 31 – potentially saving buyers thousands of pounds in tax.

The last three months of 2020 have seen a rise of 6.4 per cent across the UK on the same three months last year, says the Nationwide. The East Midlands had seen the highest jump – by 8.6 per cent to £200,951. The building society uses quarterly figures for regions, not monthly.

But experts say the boom will fade after the stamp duty cut ends and Covid-related job losses increase. The Government’s furlough employment support also winds up in the spring.

Howard Archer, chief economic adviser to the EY Item Club, said the boom ‘will prove unsustainable sooner rather than later’.