According to Halifax: UK house prices hit a new record

However, price growth is slowing.

The average home price in the UK hit a record £ 253,374 in December, but growth is slowing, and prices may fall during the year, according to Britain’s largest mortgage lender.

Halifax said UK house prices ended 2020 on average 6% higher than 2019, as pent-up demand after the first national shutdown and the government stamp tax holiday spurred a home-buying boom for households.

The UK’s average home was worth £ 14,295 more in December of last year than it was in the same month in 2019.

“Prices skyrocketed as a result of stifled demand, shoppers’ desire for more space, and the limited-time incentive of stamp duty holidays,” said Russell Galley, managing director of Halifax.

However, the lender said that the 0.2% increase in prices in December compared to November was the lowest growth rate in the last six months of continued earnings.

Halifax said there could be enough “residual strength” in the market to sustain prices in the short term, with mortgage approvals at a maximum of 13 years. However, the end of the government stamp holiday on houses up to £ 500,000 at the end of March and the tightening of the aid scheme to buy from new owners from April only are set to take the steam out of the market.

“With the pace of the UK’s economic recovery expected to be limited by the renewed national lockdown, and with unemployment widely forecast to rise in the coming months, downward pressure is likely to remain as we move forward to 2021,” Galley said.

House prices could fall as much as 5% this year.

Last month, Halifax said it expected UK house prices to fall as much as 5% this year.

“What the industry first saw as a mini-boom has gone beyond what many predicted,” said Miles Robinson, a chief mortgage officer at online brokerage Trussle. “Mortgage approvals surpassed 100,000 in November, the highest level on record since 2007. However, while the outlook is promising for the immediate future, we must remain cautious of a potential dip in spring as the stamp duty holiday and furlough schemes come to an end and the impact of a third national lockdown unravels.”

Howard Archer, the chief economic adviser to the EY Item Club, a financial forecasting group, said the latest Halifax report suggested that house prices “may be starting to come out of the boil,” and that resistance is likely current market trends become unsustainable sooner rather than later.

“The housing market is likely to come under mounting near-term pressure as the economy continues to be affected by restrictions in most areas, while there may well still be a significant rise in unemployment despite the furlough scheme being extended until April. Meanwhile, earnings growth looks likely to be limited,” Archer said.

However, he said the housing market may start to pick up again in late 2021 if the UK economy gets on a firmer footing and the jobs market picks up, supported by the vaccine programme.

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