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House prices surge 7.3% in 2020 despite the pandemic, recession and Brexit

30 Dec 2020
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House prices surge 7.3% in 2020 despite the pandemic, recession and Brexit

House prices enjoyed their fastest annual growth for six years in 2020 after ending the year 7.3% higher.

The average house price across the UK jumped to £230,920 in December as the market boom sent property values up another 0.8% since November, Nationwide Building Society said.

The report revealed that prices have jumped 5.3% since March, when the pandemic struck as demand has been boosted by the stamp duty holiday, pent-up demand during the first lockdown and the shift to home working.

Nationwide chief economist Robert Gardner 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%.

"But, since then, housing demand has been buoyed by a raft of policy measures and changing preferences in the wake of the pandemic."

The East Midlands saw the strongest growth - at 8.6% - while London and the areas around it, Scotland and Northern Ireland saw the smallest rises.

Tomer Aboody, director of property lender MT Finance, said: "With buyers looking for more space, the Midlands has benefited most due to it's central location, allowing commuters to buy in greener spaces while still able to commute to all parts of the country.

"This is could be the new trend, with people looking to work from home much more but needing easy access to towns and cities for meetings and office locations."

2020 house price rises by region:

  • East Midlands - £200,951 - 8.6% up
  • Outer South East - £296,291 - 8% up
  • North West-  £176,925 - 8% up
  • Yorks & Humberside - £172,326 - 7.7% up
  • West Midlands - £207,603 - 7.5% up
  • Wales - £169,846 - 6.6% up
  • South West - £264,512 - 6.6% up
  • North - £137,531 - 6.5% up
  • East Anglia - £242,804 - 6.4% up
  • London - £486,562 - 6.2% up
  • Northern Ireland - £149,382 - 5.9% up
  • Outer Metropolitan - £377,677 - 5.6% up
  • Scotland - £156,768 - 3.2% up

Looking ahead, not many people thought this year's growth would continue in 2021.

Gardner said the outlook for the housing market was "highly uncertain" and is dependent on how the pandemic evolves, restrictions to control the virus and knock-on effects on the economy.

"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," he said.

Tom Scarborough, chief executive of  Movewise, said: "Pent-up demand, the lure of the Stamp Duty holiday and mortgage holidays from lenders have provided extremely buoyant financial conditions for the property market during the pandemic, with people reconsidering their living arrangements and accelerating demand for homes with better outside space. 

“These stimulative conditions are not here forever, and boons to the employment market such as the furlough scheme will all unwind in early 2021 leaving us to hope that the economy will reignite as we put both the pandemic and Brexit behind us."

But not everyone is as pessimistic.

Lucy Pendleton, property expert at independent estate agents James Pendleton, said: “It’s important not to underestimate this market going into 2021, despite some predicting price falls of nearly 14% next year. 

"When the vast majority of these agreed sales were negotiated, the uncertainty of a no-deal Brexit was still firmly on the table. 

"So despite being faced down by major reasons to wait and see or be financially conservative, buyers were still content to bid up prices and deliver a rise in annual growth that hit a six-year high this month.

“This underlines how buyers are more motivated by the need to move than a relatively small tax incentive.

"Any hint that the market is less hung up on a tax break than previously thought, and driven more by a hunger for more space means prices will be more insulated next year, and the rebound in the economic outlook could also still surprise us.”

Article by James Andrews, Mirror.

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