The U.K.’s real estate market is closing out 2020—an unprecedented year for both the sector and just about everything else—with property prices at an all-time high.
Though it would have seemed unthinkable back in the spring when the coronavirus pandemic first struck in the country, average home prices reached £230,920 (US$314,168) in December after growing 7.3{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb} annually, according to a report released Wednesday from building society and mortgage provider Nationwide.
“The resilience seen in recent quarters seemed unlikely at the start of the pandemic,” Robert Gardner, Nationwide’s chief economist, said in the report. “Indeed, housing market activity almost ground to a complete halt during the first lockdown as the wider economy shrank by an unprecedented 26{911ea05452e114f1778c76ca86733b6032c246f8f651bb1f01d12abf04b54efb}.”
Pushing up values has been a demand for homes that “has been buoyed by a raft of policy measures and changing preferences in the wake of the pandemic,” Mr. Garner added.
In July, the government introduced a temporary tax break that scraps the stamp duty tax on home purchases below £500,000 and cuts it for buys above that point, and lenders offered payment holidays to impacted borrowers.
Those measures made moving even more appealing to a barrage of Brits, many of whom were already prepared to relocate after reevaluating their housing needs after increased time spent at home.
On top of buyers’ lists have been more space, detached properties and a move away from more densely populated locations.
Looking forward, those behavioral shifts “may continue to provide support for housing market activity, while the stamp duty holiday will continue to provide a near-term boost by bringing forward home moves,” according to Mr. Garner.
“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 March,” he said.
