UK house prices rise in 2020 as annual growth hits six-year high

House prices grew across the UK in the three months to December, a report by building society Nationwide has found.

Annual growth reached a six-year high of 7.3% in 2020, the mortgage lender said, ending the year 5.3% above the level prevailing in March when the pandemic struck the UK.

According to Nationwide, average house prices in December stood at £230,920 – up 0.8% month on month from £229,721 in November.

The East Midlands saw the biggest rise in the fourth quarter (8.6%) – up from a 4.0% rise in the same period last year – followed by the ‘Outer South East’ region, which includes cities such as Brighton, Southampton and Oxford, at 8%.

The neighbouring ‘Outer Metropolitan’ region, which includes Slough, Guildford, Crawley and Chelmsford, was the weakest performing English region, but still saw prices rise by 5.6% over the year.

Meanwhile, London saw a 6.2% increase, with average prices reaching their highest ever at £486,562.

There was also a marked rise in annual price growth in Northern England in the fourth quarter, according to the report. In the North West house prices grew 8% in the quarter and in Yorkshire & Humberside prices increased 7.7%.

In the other home nations, Wales saw prices rise by 6.6%, while Northern Ireland saw a 5.9% increase. Scotland saw the weakest growth but still saw prices rise 3.2% in 2020.

Housing demand was buoyed by changing preferences in the wake of the pandemic and the stamp duty holiday, according to Robert Gardner, Nationwide’s Chief Economist.

He 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 number of mortgages approved for house purchase each month reached their highest level for a decade in October – nearly 50% above the monthly average recorded in 2019 – Nationwide said.

But the mortgage lender said the outlook remained “highly uncertain”.

Mr Gardner added: “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.

“Behavioural shifts as a result of Covid-19 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.

“However, housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.”