House prices end 2020 at record high but growth slows in December

by | Jan 8, 2021

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(Sharecast News) – UK house prices ended 2020 at a record high thanks to pent-up demand after the first lockdown in March, but the pace of growth slowed in December, according to figures released on Friday by mortgage lender Halifax.
House prices were 6% higher than in December 2019, following a 7.6% jump in November.

On the month, however, prices were up just 0.2% in December, following 1% growth the previous month, which was the smallest rise in six months.

Halifax managing director Russell Galley said: “2020 was a tale of two distinct halves for the housing market. Following a strong start, the first half was dominated by the restrictions on movement due to Covid-19, and prices were subsequently down 0.5% at mid-year as the market effectively ground to a halt.

 
 

“However, 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 stamp duty holiday.

“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 widely predicted to rise in the coming months, downward pressure on house prices remains likely as we move through 2021.”

Capital Economics said: “2020 may well have been the strangest year for the housing market since the Halifax house price index began in 1983. Despite the biggest drop in GDP since 1709, house prices rose by 7% y/y in Q4, the largest rise since 2015. But we think that most of the increase in house prices in 2020 will be reversed in 2021 after policy support is withdrawn.”

 
 

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