Halifax has revealed that house prices in December 2020 were 0.2% higher than in November.
House prices in December were 6.0% higher than in the same month a year earlier.
In the latest quarter (October to December) house prices were 2.6% higher than in the preceding three months (July to September).
Russell Galley, managing director of Halifax, said: “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.
“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.”
Anna Clare Harper, chief executive of asset manager SPI Capital, added: “6% annual house price growth will be seen as good news for the property market and reflects positive forces that are applying uniquely to housing at this time.
“As anticipated, monthly house price growth has now slowed from its fastest annual growth of 1% in 2020. As we look to 2021, some slowdown is anticipated, with the end of temporary stamp duty reductions, and as difficult economic conditions filter through to the housing market.
“However, the underlying forces are limited housing supply (not helped by a slowdown in building in 2020) and growing demand, in particular for relatively affordable housing that offers indoor and outdoor space. In addition, many investors prefer to put their money into tangible assets in times of uncertainty, in a context where other assets have been volatile, and savings options are disappointing.
“As a result, while it is expected that house-price growth will slow in pace, the underlying value of housing – as an investment, and as people’s homes – is expected to remain strong and stable, in particular relative to other assets.”