U.K. Housing Boom Pushes Price Growth to Six-Year High

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U.K. house price growth rose to a six-year high in December, rounding off a strong 2020 for the market that defied a wider economic downturn.

Values climbed 7.3% from a year earlier to an average of 230,920 pounds ($312,800), Nationwide Building Society said Wednesday. They increased 0.8% from a month earlier.

U.K. Housing Boom Pushes Price Growth to Six-Year High

The housing market has boomed in 2020 as buyers sought new properties after the spring lockdown closed the market and the government temporarily suspended a tax on home purchases. The growth continued through a second wave of the virus, as sales and viewings were allowed to keep operating even in areas hit by the harshest restrictions.

“The resilience seen in recent quarters seemed unlikely at the start of the pandemic,” said Robert Gardner, Nationwide’s chief economist. “Housing demand has been buoyed by a raft of policy measures and changing preferences in the wake of the pandemic.”

Analysts are divided on the outlook for 2021. Property website Rightmove sees asking prices climbing 4% due to a backlog of demand and rush to move before the tax reduction expires at the end of March, while Halifax says prices could slump as much as 5% next year as unemployment rises.

“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,” Nationwide’s Gardner said.

©2020 Bloomberg L.P.

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