Figures from the Nationwide show prices rose another 0.8% in December
House prices have ended 2020 more than 7% up on the level at the start of the year, following a further 0.8% rise in December, according to the Nationwide.
The mortgage lender said prices rose to an average of more than £230,000 in Deccember, equivalent to a rise of 7.3% for the whole of 2020.
All regions have seen house price rises in the fourth quarter of the year, the Nationwide said, with growth the strongest in the East Midlands.
The figures mean that prices have risen by more than 5% since the onset of the covid-19 pandemic in March, which most predicted would lead to a significant drop in demand for homes as economic problems grew.
However, demand for housing has boomed since lockdown as a result of pent up demand, a temporary stamp duty holiday, and homeowners reassessing their living conditions in light of the pandemic.
Robert Gardner, Nationwide chief economist, said housing demand had been buoyed by a raft of policy measures and changing preferences in the wake of the pandemic and had remained robust in recent months even as the wider economic recovery lost momentum in the face of a second wave of coronavirus and further lockdowns.
He said: “The pandemic itself boosted activity, as life in lockdown and changes to working patterns led many to re-evaluate their housing needs.
How he warned that it was unclear how much longer prices will continue. He said: “The outlook remains highly uncertain.
“Behavioural shifts as a result of covid-19 may continue to provide support for housing market activity, while the stamp duty holiday will continue to provide a near-term boost by bringing forward home moves.
“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.”
The figures came after number of mortgages approved for house purchase each month reached their highest level for a decade in October, nearly 50% above the monthly average recorded in 2019.
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