UK house prices climbed by 7.5% in 2020, the steepest rise in six years. Nationwide's House Pricing Index showed that the average cost of a house in December was £230,320, around £1200 more than just a month ago.
This year's housing boom caught many by surprise, as the effects of Coronavirus ravaged much of the rest of the UK economy. Nationwide's Chief Economist, Robert Gardiner, attributed the remarkable performance to a raft of new policies and changes in buyers' attitudes.
The furlough and Self Employment Income Support schemes provided vital support for the labor market, while a host of measures helped to keep down the cost of borrowing and keep the supply of credit flowinghe said
The stamp duty holiday ushered in by Chancellor Rishi Sunak in March provided a lucrative incentive for many would-be buyers to try and clinch a deal over the course of the year.
Until March 2021, buyers won't pay any stamp duty on a property purchase worth less than £500,000. The rise of the home office and lockdown life have also shaped demand in the market.
According to Nationwide's research, detached and semi-detached homes saw the most significant price gains, as shoppers re-evaluated their lifestyles and housing needs.
With many white-collar workers able to do away with their daily commute, buyers have leaned towards rural locations and roomier properties, driving prices up as the pandemic weakened the pull of city-living.
Despite the urban exodus, prices rose right across the country at the end of the year compared to the period from July-September, when some regions lagged behind.
Between October-December, the East Midlands had the strongest performance, securing its spot as the top region for price growth over 2020 as prices rose 8.6%.
Of the home nations, house prices in England increased the most, by 6.9% on average, while Scotland experienced the smallest margin:
This is a sharp contrast with 2019 when England was the weakest nation with minimal annual growth. Wales saw prices rise by 6.6%, whilst Northern Ireland saw a 5.9% increase. Scotland saw the weakest growth of the home nations, with prices only up 3.2% in 2020. This contrasts with 2019, where Scotland ended the year on top, with a growth of 2.8%.said Mr. Gardiner
According to Nationwide, the spectacular thrust which propelled the market against all expectations this year is unlikely to last long into 2021, as financial support schemes start to wind down and the long-term impacts of COVID-19 on the wider economy begin to materialize.
Behavioral shifts as a result of COVID-19 may continue to provide support for housing market activity, while the stamp duty holiday will continue to provide a near-term boost by while the stamp duty holiday will continue to provide a near-term boost by bringing forward home moves. However, housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labor market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of Marchadvised Mr. Gardiner
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