(Sharecast News) – UK house prices rocketed to fresh highs in November, official data showed on Wednesday, with the average cost of buying a home in London topping £500,000 for the first time.
According to the Office for National Statistics, UK average house prices rose by 7.6% over the year to November 2020 to stand at a record high of £250,000.
An improvement on October’s 5.9% increase, it is the highest annual growth rate the UK has seen since June 2016, the ONS said. It also comfortably beat forecasts for growth of 5.6%.
London’s average house prices were some of the biggest gainers, topping £500,000 for the first time to stand at a record £514,000.
Away from the capital, the north east surpassed its pre-economic downturn average house price peak of July 2007, and now stands at £140,000. It is the final English region to do so.
The surge in house prices has been attributed to pent-up demand following the first national lockdown alongside the stamp duty holiday, which was introduced by the chancellor last year. It is scheduled to end on 31 March.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The housing market ended 2020 on a strong. Prices in London led the way with a 9.7% year-over-year increase, busting the myth that the pandemic has triggered a mass exodus to the suburbs.
“Nonetheless, the scenario in which house prices reverse some of their recent gains this year is clear to see. The combination at the end of March of the withdrawal of the furlough scheme, the end of mortgage payment holidays and the return of the stamp duty threshold to its former level likely would leave house pries about 2% lower by the ned of the year than at present.”
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “The buying frenzy continued in November, pushing prices up to record highs. Early signs are that this pushed through into a hectic December, where prices hit new highs again. However, with the stamp duty holiday coming to an end in March, the big question is what happens next.
“Given the length of time it takes for sale to go through, there’s every chance that if you make an offer in 2021 you won’t have completed the purchase by the deadline. This is likely to take some of the urgency out of the market in the first three months of the year.”
Paul Stockwell, chief commercial officer at Gatehouse Bank, said: “House prices defied expectations by increasing throughout 2020. But there are signs from other indices that price growth has now begun to slow.
“The UK housing is still open during this lockdown, but demand is likely to have started to taper off as buyers begin to concede they will not be able to complete a transaction in time to make the stamp duty deadline.”
The ONS calculates the monthly House Price Index using data from HM Land Registry, Registers of Scotland, and Land Property Services Northern Ireland.
