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House price growth hits six-year high at year end

House price growth hits six-year high at year end

House price growth hit a six-year high at the end of this year as experts pointed to the chancellor's stamp duty holiday and a cultural shift in the wake of the coronavirus pandemic as cause for increased demand. 

The latest house price index published by Nationwide today (December 30) found annual house price growth hit a high of 7.3 per cent this month, up from 6.5 per cent in November. 

The growth saw the average house price rise from £229,721 in November to £230,920 in December. 

According to Nationwide house prices ended the year 5.3 per cent above the level they were at when the coronavirus crisis hit the UK in March.

Robert Gardner, chief economist at Nationwide, said the recent resilience seen in the housing market seemed unlikely at the start of the pandemic.

He said: "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."

Mr Gardner pointed to the government's furlough and self-employed support schemes as providing "vital support for the labour market", coupled with the sustained low cost of borrowing. 

He also said the stamp duty holiday, announced by chancellor Rishi Sunak in July, had "stimulated housing demand" and accelerates moving plans. 

But Mr Gardner added: "However, 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." 

The data showed all regions across the UK saw a pickup in house price growth in the final quarter of this year, with the East Midlands performing as the strongest region. 

Opinion Split 

Nicky Stevenson, managing director at estate agent group Fine & Country, said opinion was split on whether house prices would continue to rise next year. 

Ms Stevenson said: "The outlook has definitely improved and buyers shrugged off any headwinds to close out the year in robust fashion.

"The Brexit deal will give the housing market a much softer landing than feared, turning a potential stall into more of a glide.

"With this key obstacle out of the way, it’s not likely, in a market where demand and supply are still so mismatched, that the UK will get anywhere close to zero growth, even in real terms as inflation remains very low."  

 

Mark Harris, chief executive of mortgage broker SPF Private Clients, said the resilience of the housing market showed "no signs of diminishing" in the near future.

Mr Harris said: "Prices and transaction levels remain buoyant as we head towards the end of the year. 

"There are several tailwinds and the housing market is making the most of them.

"Buyers require more space - both inside and out for the family and in order to work from home - and are keen to take advantage of the stamp duty holiday along the way if they can.