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House prices jump 6% to finish 2020 at record high

Written by: Lana Clements
House prices ended 2020 at a record high as surging values were fuelled by pent-up demand and the stamp duty holiday in the final months of the year.

The typical home is worth £253,374 after edging up by 0.2% between November and December to mark six months of continuous gains, data from Halifax showed.

Average house prices were 6% higher at the end of 2020 when compared to December 2019.

However, monthly growth significantly slowed in December from the 1% monthly rise recorded in November, indicating the current burst of activity in the market may be winding down.

Covid restrictions closed the property market in March, affecting confidence and prices, but it soon picked up with the reopening in May.

Chancellor Rishi Sunak bolstered activity with a temporary reprieve on stamp duty for properties under £500,000 until the end of March this year.

Russell Galley, managing director of 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,” he said.

“However, when the market reopened, prices soared as a result of pent-up demand, a desire among buyers for greater space and the time-limited incentive of the stamp duty holiday.”

Downward pressure likely in 2021

Critics warned the end of the stamp duty holiday and the economic uncertainty could restrain house price growth in 2021.

Galley said “downward pressure” remains likely.

Jonathan Hopper, chief executive of Garrington Property Finders, said: “In the space of just six months the property market has gone from wiped out to white hot, before ending up back in the middle.

“December’s sharp deceleration in price growth – down to the lowest monthly level seen in six months – suggests the party is winding down.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Not surprisingly, the pace of house price rises started to slow in December, which is exactly what we found in our offices, 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.

“Therefore, looking forward 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.”

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