House prices are up 6% year-on-year, according to the latest Halifax House Price Index.
As a result of the increase, the average UK property price in December 2020 was noted at £253,374.
The index also showed that house prices were up 0.2% month-on-month, and by 2.6% on a quarterly basis.
Russell Galley, managing director of Halifax, said: “Average houses prices rose again in December, stretching the current run of continuous gains to six months.
“However, the monthly rise of 0.2% was the lowest seen during this period and significantly down on the 1.0% increase in November.
“2020 was a tale of two distinct halves for the housing market. Following a strong start, the first half was dominated by the restrictions on movement due to COVID-19, and prices were subsequently down 0.5% at mid-year as the market effectively ground to a halt.
“However, when the market reopened, prices soared as a result of pent-up demand, a desire amongst buyers for greater space and the time-limited incentive of the stamp duty holiday.
“The annual rate of inflation did fall compared to November (+7.6%) to stand at its lowest level since August, it should be noted that this also reflects a particularly strong period for house prices towards the end of 2019 as political uncertainty at that time began to ease.
“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.
“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.”
Nick Barnes, head of research at Chestertons, added: “There were 4% more homes for sale in 2020 than the previous year compared to a more than 40% rise in buyers.
“In London, Chestertons’ pipeline of deals at the end of 2020 was 53% higher than a year ago and buyer enquiries were 49% higher.
“A mooted higher Capital Gains Tax regime would affect second home owners and investors but could prompt a flurry of sales to beat the deadline.”
“Although the hangover from COVID-19 will be felt throughout 2021 and beyond, and despite the uncertainties following the UK’s departure from the European Union, the outlook for the residential market in 2021 is positive.
“Even though we have entered a new Tier 5 national lockdown, two vaccines are now being rolled out and there is light at the end of the coronavirus tunnel.
“The economy is forecast to grow by 5.4% and interest rates are set to remain low with banks still keen to lend.
“The stamp duty holiday will continue to motivate buyers until the spring and there is still a large number of buyers in the market with the financial strength and confidence to move.”