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Annual house price growth reaches five-year high

Christina Hoghton
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Christina Hoghton

House price growth has been strong during the pandemic, driven by the Stamp Duty holiday and underpinned by government support

Annual house price growth rose to 6.5% in November, the highest rate since Jan 2015, according to Nationwide.

The building society said property prices rose 0.9% month-on-month to £229,721.

Despite the rise, Robert Gardner, Nationwide’s chief economist, was cautious about the months ahead. He said: “The outlook remains highly uncertain and will depend heavily 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 provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.

“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.”

Lucy Pendleton, spokesperson for estate agents James Pendleton, added: “The fact that house price growth will soften in the first half of 2021 is possibly the worst kept secret in property but significant, outright falls are not a done deal.

“There has been some speculation that house prices will decline next year by 8%, roughly in line with the dent made in GDP this year, but the market may yet defeat those forecasts.

“Buyers were nimble in how they reacted to the stamp duty holiday but they are rarely financially naive. The demand that continues to drive this growth has been fuelled by those who feel financially secure and can think long term. The longer this winning streak continues, the more of them there are, so a softer landing next year might be more self-fulfilling than people imagine.”