U.K. House Prices Climb to Record as Tax Cut Stokes Market

(Bloomberg) -- U.K. house prices rose to a record high last month as a government incentive to buy and a desire to move out of big cities boosted demand.

Prices rose 6% from a year earlier in December to an average 253,374 pounds ($340,000), mortgage lender Halifax said Friday. On the month alone, they gained 0.2%.

The property boom is being fueled by a tax cut on transactions worth as much as 15,000 pounds to buyers. The Covid-19 pandemic is also boosting interest in moving to larger properties and those outside of city centers as remote working becomes increasingly common.

The number of Britons working from home will rise five-fold in by 2025, according to a separate survey of chief financial officers published by Deloitte. The same poll found that 98% of the 90 finance bosses expect corporate and individual tax to rise.

The monthly gain showed the housing market may be starting to lose some momentum. Halifax predicts prices could slump as much 5% in 2021 as the property transaction tax break expires in March and new restrictions to stem the spread of the virus weigh on the economy.

With “unemployment widely predicted to rise in the coming months, downward pressure on house prices remains likely as we move through 2021,” said Russell Galley, managing director at Halifax.