Record high for house prices in UK
2020 ended with the average cost of a British property 6 per cent higher year on year, writes Vicky Shaw
The average cost of a residence in the UK ended 2020 at a record high of £253,374, according to The Halifax House Price Index.
House prices in December were 6 per cent higher than the same month a year earlier, Halifax stated. However, a month-on-month price increase of 0.2 per cent was significantly down on the 1 per cent increase seen in November, the report added.
Russell Galley, managing director at Halifax, said: “Average house prices rose again in December, stretching the current run of continuous gains to six months.
“However, the monthly rise of 0.2 per cent was the lowest seen during this period, and significantly down on the 1 per cent increase in November.
“The average house price was therefore little changed, but nonetheless still reached a fresh record of £253,374.”
Galley observed that 2020 “was a tale of two distinct halves for the housing market”, with prices down by the middle of the year – after a strong start – amid Covid-19 restrictions which affected housebuying operations.
He continued: “When the market reopened, prices soared as a result of pent-up demand, a desire amongst buyers for greater space and the time-limited incentive of the [English] stamp duty holiday.
“All this left average prices sitting some 6 per cent higher at the end of 2020 when compared to December 2019, a notably strong performance given the anticipated impact of the pandemic earlier in the year.”
Galley added: “In the near-term, and with mortgage approvals still sitting at a 13-year high, there may be enough residual strength in the market to sustain prices up to the deadline for the stamp duty holiday and the scaling back of Help to Buy at the end of March.
“However, with the pace of the UK’S economic recovery expected to be constrained by the renewed national lockdown, and unemployment predicted to rise in the coming months, downward pressure on house prices remains likely as we move through 2021.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Given we had two months last year when the property market was forced to close, it really is astounding that prices ended the year 6 per cent higher.
“The availability of very cheap mortgage finance – albeit with some restrictions on high loan-tovalue products – has helped fuel the surge in activity. The good news as far as this year is concerned is the re-emergence of 90 per cent products, with HSBC a welcome return to the fray this week.
“Covid has given people the opportunity to focus on their housing requirements and what is important to them and their families.”
Jeremy Leaf, estate agent and former Royal Institution of Chartered Surveyors (Rics) residential chairman, said: “Not surprisingly, the pace of house price rises started to slow in December, as home movers were deterred by further lockdown restrictions and seasonal distractions.
“However, we recorded very few abortive sales, other than when chains had broken down or price renegotiations in response to reduced activity.
“We expect the pattern to be repeated and the overwhelming majority of transactions to proceed to completion, followed by more balance between supply and demand as rollout of the vaccinations hopefully accelerates.”
Mike Scott, chief analyst at Uk-wide online estate agent Yopa, said: “We expect strong housing market activity and further price growth in January, followed by a minor slowdown from February, once there’s no realistic prospect of completing a newly agreed purchase before April.
“The slowdown caused by the return of stamp duty is likely to be quite short-lived, as has happened with previous stamp duty changes, but the direction of the housing market in the second half of the year will depend on the progress made in beating the pandemic, thus allowing the economy to begin to return to normal.”
Given we had two months when the property market was forced to close, it really is astounding that prices ended the year 6 per cent higher