Property

Average house prices finish the year strongly

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9th January 2017
"The housing market continues to be driven by buyers and sellers who want to get on and do something"

The latest Halifax house price index has revealed that over the last three months of 2016, the average price of a home in the UK was 2.5% higher than in the previous three months.

The quarterly rate of change in December was the highest seen since March 2016.

Prices in the three months to December were 6.5% higher on an annual basis. This was the second consecutive increase in the annual rate from a 2016 low of 5.2% in October and compared to 6.0% in November.

Despite the increases in November and December, the annual rate remains significantly below the 10.0% peak reached in March 2016.

House prices increased by 1.7% between November and December - the fourth successive monthly rise and also the biggest since March 2016.

Martin Ellis, Halifax housing economist, said: “House prices finished 2016 strongly. Prices in the final quarter of the year were 2.5% higher than in the previous quarter. The annual rate of growth increased, rising for the second consecutive month, from 6.0% in November to 6.5%.

Slower economic growth, pressure on employment and a squeeze on spending power, together with affordability constraints, are expected to reduce housing demand during 2017. UK house prices should, however, 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 is most likely expected to 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.”

Guy Meacock, director of buying agency Prime Purchase, said: "The housing market continues to be driven by buyers and sellers who want to get on and do something. There is vey little speculation at the moment and the need for advice is stronger than ever. It will not pay to make rash decisions. It is all about getting early access to properties and the inside track."

Jeremy Leaf, north London estate agent and a former RICS residential chairman, had this to say: "The Halifax figures reflect a combination between the shortage of new and existing housing stock and a slight upturn in confidence at the end of the year as buyers try to take advantage of very low interest rates. However, most of the confidence seems to be found outside the M25 rather than in it, where oversupply and stamp duty on higher-priced properties is more relevant.

Since returning to work in 2017 we have noticed a constructive realism among buyers and sellers keen to get on with their business irrespective of political and economic uncertainty."

Russell Quirk, eMoov CEO had this to say: "A late flourish for the UK housing market at the back end of 2016 sees price growth remain strong which will be welcomed by UK homeowners. 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, and 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.

Low money costs, a demand led by an aspirational home owning culture and scant supply, will all ensure that property prices remain buoyant regardless of those using falling prices as a scare tactic for their own personal agenda."

Mario Berti, CEO of Octopus Property, said: "People who predicted the worst for the UK property market in the wake of the EU Referendum vote last June have so far been proved wrong.

While the economic and political backdrop remains uncertain in the wake of Brexit, tight supply, high levels of employment and very low borrowing costs are acting as a floor under prices. Sterling weakness will also continue to attract foreign buyers, again bolstering prices.

With both supply and borrowing costs so low, an imminent collapse in house prices looks like a remote risk. But there are storm clouds ahead, particularly in the form of rising inflation, which has the potential to hit consumer sentiment, and house prices, hard."

Ian Thomas, CIO and Co-founder of LendInvest said: "While the property market proved resilient towards the end of the year, 2017 will likely see a slowdown in growth as the impact of last year's Stamp Duty changes are felt by investors and the government begins to negotiate the UK's withdrawal from the EU."

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