On January 30 2020 the World Health Organisation formally declared a Public Health Emergency of International Concern.
In a matter of weeks, the UK was in lockdown, GDP was falling, and the housing market was closed. In June, house prices fell year on year for the first time since 2012.
Had someone suggested then that we were about to see the fastest housing market recovery in history, they might have been laughed out of the room.
Yet house prices ended the year 7.3 per cent higher than they started, according to the Nationwide.
There were 103,000 mortgage approvals for home purchase in December, the highest December figure since 2006. And outside of London, rental values rose by 2.8 per cent.
The story across the country
House prices rose in every UK country and region. Even London, where prices had been falling for much of 2019, saw values rise 9.7 per cent in the year to November according to HM Land Registry.
Growth was slower in the East of England, at 4.8 per cent, and the South East, at 6.2 per cent.
But these regions saw rapid increases in the number of transactions agreed. Data provider TwentyCi reported the number of sales agreed in those regions was more than 70 per cent higher in the last eight weeks of 2020 than the same period in 2019.
The story for rents is more nuanced. Average rents in Britain fell -0.5 per cent in the year to November.
House price growth year to Nov-2020 | Rental growth year to Nov-2020 | |
London | 9.7% | -6.1% |
Birmingham | 4.6% | -3.4% |
Manchester | 3.6% | -1.4% |
City of Edinburgh | 3.1% | -2.0% |
Cardiff | 4.8% | 1.7% |
Glasgow City | 10.2% | 3.4% |
Bristol, City of | 8.4% | 4.0% |
Norwich | 3.2% | 5.0% |
Nottingham | 4.8% | 3.9% |
Newcastle upon Tyne | 0.9% | 3.3% |
Leeds | 8.0% | 0.4% |
Source: Savills Research using Land Registry, Hometrack
But this hides a two-speed market: excluding London, rental values rose 2.8 per cent. Even within the capital, the story is mixed: London rents fell -6.1 per cent but falls were concentrated in the City centre.
Rents in outer London boroughs such as Bromley and Havering were still rising.
Urban markets outside London have had a similarly tough time, with rents in Birmingham, Edinburgh and Manchester falling -3.4 per cent, -2.0 per cent and -1.4 per cent, respectively.
What is different this time?
This is the first time ever that house prices have risen while the economy shrank. House prices and transactions are up against a backdrop of GDP falling more than 10 per cent and unemployment rising to 5.5 per cent.
There is a lot to set 2020 apart from other economic downturns. Unlike the global financial crisis and the early 1990s recession, interest rates leading up to the Covid-19 lockdowns were extremely low. Government acted swiftly to protect jobs, and by introducing a stamp duty holiday one of the single most visible barriers to buying a home was lifted.
That raises questions about what happens as government support scales back.
The stamp duty holiday looks like it will end on March 31, despite growing calls for a tapering to allow stalled transactions to complete.
At that point, Oxford Economics expects that unemployment will have risen to 6.5 per cent and the furlough scheme is set to end shortly after in April.
