LONDON (Reuters) – UK house prices rose faster-than-expected in December, posting the largest annual increase in six years as tax incentives and COVID-driven appetite for larger homes continued to rise the question, said the mortgage lender Nationwide.
House prices rose 0.8% in December alone, slowing slightly from the 0.9% recorded in November, and were 7.3% higher than the previous year, well above forecasts. in a Reuters poll for a 6.7% increase.
Following the collapse in home purchases during the first months of the lockdown, there has been a surge in relocation demand, driven in part by a temporary property purchase tax exemption that will expire at the end of March.
Nationwide said the strength of the housing market contrasts with weakness in some other parts of the economy, particularly those exposed to renewed COVID-19 restrictions, and said the outlook for prices in 2021 is highly uncertain.
“Real estate market activity is likely to slow in the coming quarters, perhaps abruptly, if the job market weakens as expected by most analysts, especially once the stamp duty holiday expires at the end of March.” said national economist Robert Gardner.
So far, leave payments and similar support for the self-employed have limited the impact of a historic 26% decline in economic output on the housing market, against the previous expectations of most economists, he added.
The demand for single-family homes is the one that has grown the most, with an average increase of just over 8% in the last 12 months, while apartment prices have increased by 4%.
Reporting by David Milliken; Editing by Andrew Heavens