Tax breaks and rising demand sees strongest house price jump in 6 years
House prices enjoyed their strongest annual growth for six years in 2020 as the market was spurred on by tax breaks and changing demand amid the pandemic, according to an index.
Nationwide Building Society said the average UK house price jumped 7.3 per cent this year to £230,920 after rising 0.8 per cent in December alone.
The report revealed that prices have jumped 5.3 per cent since March, when the pandemic struck, after demand was sent surging by a stamp duty holiday and the shift to homeworking. Nationwide said the stamp duty boost had brought forward Britons' home-moving plans, while changing working patterns had increased demand for larger homes in less densely populated locations.
Robert Gardner, Nationwide's chief economist, said: "The resilience seen in recent quarters seemed unlikely at the start of the pandemic. Indeed, housing market activity almost ground to a complete halt during the first lockdown as the wider economy shrank by an unprecedented 26 per cent.
"But, since then, housing demand has been buoyed by a raft of policy measures and changing preferences in the wake of the pandemic."
However, he added that the outlook for the housing market remains "highly uncertain" as restrictions to control the virus tighten across the UK and with government support measures and the stamp duty holiday set to end in the spring.
He said: "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."
Howard Archer, chief economist at the EY Item Club, also warned that the property market will see a reversal of fortunes in 2021 and could fall by around 5 per cent by the end of next year.
He said: "The EY Item Club believes that the housing market is likely to come under mounting near-term pressure as the economy is hampered by pandemic-related restrictions, while there may well still be a significant rise in unemployment despite furlough being extended until April."