The tumultuous year of 2020 ended with record high house prices in the UK, according to the final Halifax price index of the year.
Halifax reports that prices in December 2020 were 6.0% higher than in the same month a year earlier, and have risen 0.2% between November and December.
In the final three months of 2020, house prices were 2.6% higher than in the preceding three months.
The average UK house price now sits at an extraordinary £253,374, the highest it has ever been, demonstrating an impressively strong housing market thriving during difficult economic times.
The next round of house price index will be very interesting indeed as we learn whether prices are remaining as strong in 2021 as they were in 2020.
Russell Galley, managing director at Halifax, 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.
“All this left average prices sitting some 6.0% 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. Whilst the annual rate of inflation did fall compared to November (+7.6%) to stand at its lowest level since August, it should be noted that this also reflects a particularly strong period for house prices towards the end of 2019 as political uncertainty at that time began to ease.
“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.”