UK Property Prices Rise in December

UK Property Prices Rise in December

UK Property Prices Rise in December. The latest figures from the Halifax reveal that the UK house price average rose by 1.7% in December; adding nearly £4,000 to the average house value. The rise takes 2016 increase to 6.5%. Therefore, pushing ratio of prices to earnings to just shy of pre-financial crash all-time high. The UK national average house price rose by 6.5% in 2016, putting typical home values at £222,000. Property experts expect that the continuing price rises are driven by the lack of supply in the market to leep up with the demand. December’s price rise of 1.7% equates to the average property gaining nearly £4,000 on it’s value. Therefore representing, the fastest acceleration in house values since the Brexit vote, according to Halifax. The 4,000 price rise in December across the average house price, is increasing the affordability gap. The latest surge in prices follow a slew of end-of-year predictions forecasting a marked slowdown in the market in 2017. Halifax said prices in the final quarter of the year were 2.5% higher than in the previous quarter. Furthermore, the annualised rate of increase rose to 6.5% in December from 6% in November.

Slower Growth Forecast for 2017

Martin Ellis, Halifax housing economist, predicts that house price inflation will subside in 2017 despite December’s surge. “House prices finished 2016 strongly. Slower economic growth, pressure on employment and a squeeze on spending power, together with affordability constraints; will reduce housing demand during 2017, according to predictions. “UK house prices should continue to be supported by an ongoing shortage of property for sale; low levels of housebuilding, and exceptionally low interest rates. Overall, annual house price growth nationally will likely slow to 1%-4% by the end of 2017. The relatively wide range for the forecast reflects the higher than normal degree of uncertainty regarding the prospects for the UK economy this year.” Total UK home sales for 2016 will be nearly unchanged from 2015 and 2014, at about 1.2m, according to Halifax estimates

Postivie Predictions From eMoov

Russell Quirk of online estate agent eMoov said economists are wrong to predict flat or falling prices in 2017. “It would seem positive news on house prices simply will not go away despite the efforts of some to make us accept that the market will weaken in the wake of EU referendum angst. “As we have said time and again, the UK housing market is fundamentally robust, bulletproof even. Furthermore, we do not subscribe to the view of the naysayers that we will see price reductions in 2017. The clever money, given today’s numbers, is yet more positive news which will serve to underpin the overall economy this year.” Economist Howard Archer of IHS Global Insight raised his forecast for 2017 house prices from zero to 2%. “This is a modest upward revision from our previous forecast of flat house prices in 2017. This is due to the fact that house prices are carrying more momentum into 2017 than expected. Additionally, the fact that we have slightly upgraded our UK GDP growth forecast for 2017 to 1.4% (from 1.3%). “We believe the fundamentals for house buyers will progressively deteriorate during 2017 with consumers’ purchasing power weakening markedly and the labour market likely softening. Increasing economic uncertainty is also likely to weigh down on consumer confidence and willingness to engage in major transactions such as buying a house. Housing market activity and prices are also likely to be pressurised by stretched house prices to earnings ratios and tight checking of prospective mortgage borrowers by lenders.”