House price growth cooled to a six-month low in December as Britain’s COVID-fuelled property boom began to lose steam.
Desire to move since the pandemic hit and stamp duty cuts have fuelled the market since the middle of last year, but the stamp duty holiday will end in England and Northern Ireland in March.
With time running out to get transactions over the line in time, the economy in dire straits and a potential cooling of pent-up demand after the first UK lockdown, average prices edged 0.2% higher last month.
The data from lender Halifax marked the lowest increase since June, but still showed a sixth month of growth where demand has driven prices higher. The boom in sales and prices has surprised economists amid lockdown curbs and the worst recession in three centuries.
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Prices are still 6% higher than a year ago, with the average transaction price in December £253,374 ($343,917) - marking a fresh record high.
The chances of transactions being completed before the stamp duty deadline are fading by the day, but most deals agreed in December and very early 2021 are expected to be processed in time.
“In the near-term, and with mortgage approvals still sitting at a 13-year high, there may be enough residual strength in the market to sustain prices up to the deadline for the stamp duty holiday and the scaling back of Help to Buy at the end of March,” said Russell Galley, managing director of Halifax.
“However, with the pace of the UK’s economic recovery expected to be constrained by the renewed national lockdown, and unemployment widely predicted to rise in the coming months, downward pressure on house prices remains likely as we move through 2021.”
It comes as housebuilder Barratt (BDEV.L) revealed it sold more than 9,000 homes in the first half of the year on the back of the stamp duty holiday.
The FTSE 100 (^FTSE) company said completions over the six-month period to 31 December were up 9.2%, with forward sales up 14.3%.
Barratt (BDEV.L) led gains on the FTSE 100 (^FTSE) index in London on Friday, surging 3.8%. Taylor Wimpey (TW.L) was the second biggest riser, up 3.3%, while Persimmon (PSN.L) and Berkeley (BKG.L) were also among the 10 biggest gainers.
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