According to the Nationwide House Price Index, house prices in 2020 grew at the fastest rate in six years.
In December alone, the average price of a home increased by 0.8% and now costs £230,920 in the UK and £486,562 in London.
Whilst the first lockdown stalled the housing market as viewings were banned, the market boomed this year as Rishi Sunak introduced the stamp duty holiday.
Robert Gardner, the Nationwide Chief Economist said: “Housing market conditions have remained robust in recent months, even as the wider economic recovery lost momentum and the UK economy faced the prospect of further lockdowns and continued uncertainty about the UK’s future international trading relationships.”
“The furlough and Self Employment Income Support schemes provided vital support for the labour market, while a host of measures helped to keep down the cost of borrowing and keep the supply of credit flowing.”
As people want more space and are rushing to complete deals before the end of the stamp duty holiday, Mark Harris, chief executive of mortgage broker SPF Private Clients, said that the rush will continue for some time yet.
“There are several tailwinds and the housing market is making the most of them. Competitive mortgage rates show no sign of disappearing anytime soon, with lenders most notably returning to the 90% loan-to-value space, providing a further boost for first-time buyers,” he said.
The Nationwide chief economist, however, says that the outlook is uncertain.
“Much will depend on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy,” he said.
Following the stamp duty holiday, prices are likely to cool off but may again gain traction as people continue to work remotely and want more space.
“After a strong first quarter of 2021, prices are likely to cool in the wake of the Stamp Duty deadline but could then start to increase again towards the end of the year,” said George Franks, co-founder of Radstock Property.