The housing market proved surprisingly robust through 2020 despite the COVID shock to the economy. But Halifax has warned that whilst the impact of the pandemic on household finances has been delayed by supportive government policies, unemployment is expected to rise in 2021.

Russell Galley, managing director, Halifax: “Despite the deepest recession for centuries, house prices have risen over the past year at their fastest rate since 2016, with mortgage approvals also at their highest level for over a decade.

“This growth has been driven by a shift in demand from buyers as a result of increased home working and a desire for more space, whilst the stamp-duty holiday brought forward many transactions that might otherwise have been planned for next year.

“Unprecedented government support for furloughed workers and the self-employed has prevented a sharp fall in earnings for many households. However, the impact of reduced incomes has been felt most keenly by the young and those in lower-paid service sector jobs. These groups have been relatively less active in buying and selling houses and this appears to have insulated house prices from the economic downturn so far.

“While the economy should begin to recover in 2021, helped by the roll-out of COVID vaccines, the jobs market will inevitably adjust to the changes in demand that are occurring, and unemployment is expected to rise. With the stamp duty holiday also due to expire in March – and lower levels of demand – housing market activity is likely to slow.