London house prices climb, as UK annual growth accelerated further in December

Robert Gardner, Nationwide's chief economist, said: “The resilience seen in recent quarters seemed unlikely at the start of the pandemic….But, since then, housing demand has been buoyed by a raft of policy measures and changing preferences in the wake of the pandemic.”

When the first lockdown started in March, people were urged to avoid moving, viewings were off the cards, and estate agents temporarily closed branches.

The rules relaxed in May, with firms seeing pent-up demand for moves, with many people reassessing housing needs during the lockdown. A suspension of stamp duty on property sales of up to £500,000 was then announced in July, boosting the industry further.  

A number of firms recently said high demand for properties has continued into December, with many customers trying to get deals over the line before the stamp duty holiday finishes at the end of March 2021.

But Gardner cautioned: “The outlook remains highly uncertain. Much will depend 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."

He said 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”.