UK house prices are set to finish the year on a high note despite the worst downturn since the 1700s, with the residential property market racking up £62bn more in agreed sales in 2020 than last year, according to new data.
Property website Zoopla said house prices rose at an annual rate of 3.9 per cent in November, taking the average cost of a home by its metrics to around £223,000. It was the strongest growth since 2017, and up from 1.3 per cent a year ago.
It is the latest evidence that the housing market has been unperturbed by the shock waves rippling through the economy during the coronavirus crisis.
Experts say that lockdowns have made people want to move house, while boosting the savings of many households. A major tax break for new buyers has also driven up prices, they say.
Although exact estimates of the growth vary – and should not be taken as exact – all the data points to a stellar year for the property market in 2020.
Zoopla today said the value of UK house sales agreed in 2020 will top £300bn, £62bn more than in 2019. That is despite the property market being closed for around two months in the spring.
The rebound in sales has been strongest in the south east and eastern of England, Zoopla said. Its data showed that older, wealthier, long-time homeowners have taken a growing share of sales.
Jump in demand drives UK house prices
Zoopla said there had been a 40 per cent jump in demand for housing in 2020 compared to 2019. Yet it said supply had only increased by around four per cent, helping to explain the surge in prices.
Richard Donnell, director of research at the property website, said a “once in a lifetime re-assessment of housing” was the key driver of the 2020 boom.
He added that it has “has further to run in our view and… will support demand into 2021”.
Another key factor has been chancellor Rishi Sunak’s stamp duty holiday. It raised the threshold at which the transaction tax is paid to £500,000 and will last until March, causing people to rush to complete their deals before then.
However, Donnell said the market “is not immune to economic forces and rising unemployment”.
He said Zoopla expects annual growth in UK house prices to reach five per cent by around February 2021. But he said it would then slow to around one per cent by the end of the year “as demand starts to weaken”.