Property

Halifax: New house price record set in December

Property Reporter
|
8th January 2021
house prices 5

The UK's longest-running monthly house price index has revealed that the average price of a home in the UK continued to climb in December, reaching a new high of £253,374.

Halifax say that despite the pace of growth is beginning to slow, prices in December were 6.0% higher than in the same month a year earlier after rising 0.2% between November and December. In Q4, house prices were 2.6% higher than in the preceding three months.

The market widely expects that these figures will rise over the next month due to the looming Stamp Duty Holiday deadline, but will likely settle once it becomes unrealistic to complete a new purchase before April.

Russell Galley, managing director at Halifax, comments: “Average houses prices rose again in December, stretching the current run of continuous gains to six months. However, the monthly rise of 0.2% was the lowest seen during this period and significantly down on the 1.0% increase in November. The average house price was therefore little changed, but nonetheless still reached a fresh record of £253,374.

“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.

He concludes: “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.”

Joshua Elash, director of property lender MT Finance, says: "The housing market is booming, with transactions up for the seventh straight month and values up 6 per cent on December of last year.

"The macro-economic disruption caused by the pandemic has been, at least temporarily, less disruptive to the property market than Brexit uncertainty and the General Election was in the previous year. The results are attributable to pent-up demand, carried over from 2019, and demand driven by a desire to take advantage of the present stamp duty holiday.

"We expect similar growth over the course of the next several months as buyers rush to meet the deadline for this tax break. The longer-term effects of the pandemic are yet to be borne out, but with vaccines being rolled out, and a Brexit deal on the table, we have a more positive outlook and now don’t expect that there will be a significant correction in house prices in 2021.

"It is considered that the Chancellor should extend the existing deadline for the stamp duty holiday to ease the burden on the mortgage industry, which is struggling to meet present demand, particularly given the extent to which the latest lockdown will create some inefficiency."

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