House prices up 1.7%

House prices up 1.7%

Average house prices across the UK have risen once again, with a 1.7 per cent rise month-on-month and a rise of nearly 10 per cent since January 2015.

According to Martin Ellis, housing economist for the Halifax, the continued upward pressure on house prices - approximately £4,000 on average over the month - has been caused by a persistent lack of supply of affordable housing.

Even over the last three months house prices still increased.

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He said: “House prices in the three months to January were 2.2 per cent higher than in the previous three months.

“This was higher than in the two preceding months when this measure was below 2 per cent.

“The imbalance between supply and demand continues to exert significant upward pressure on house prices. This situation looks set to persist over the coming months.”

However, Mr Ellis said the boom would have to come to an end, adding: “Increasing affordability issues, as price increases continue to exceed wage growth, are likely to curb housing demand and cause price growth to ease.”

Jeremy Duncombe, director of the Legal & General Mortgage Club, said although the 1.7 per cent monthly increase did not seem too big, it was important to look at the longer-term situation.

He said: “Although house price growth may seem more subdued on a monthly basis compared to the more significant surges seen in previous years, it is important to look at the long-term trends.

“House prices are still significantly up on the same period last year, and are continuing to climb at a rate that far exceeds inflation and wage growth.

“This is eroding people’s ability to get on the property ladder, as the average asking price is rising faster than prospective buyers can save money for a deposit.”

“This trend is likely to continue well into 2016 unless more properties are built to cope with current levels of demand.”

Halifax UK House Prices January 2016 (seasonally adjusted)

Annual change: + 9.7%

Quarterly change: + 2.2%

Monthly change: + 1.7%

Average Price: £212,430

Rob Weaver, director of investments at property crowdfunding platform Property Partner, said: “Supply is the bugbear, now at a record low with demand racing ahead as confidence in the housing market remains robust, at least for the short-term.

“For the last six years, the London property market has outstripped all other regions. Transactions in Central London have dropped off, but the outer boroughs are surging ahead.

“Potential buyers are hunting for more affordable housing, attracted by regeneration in places like Thamesmead and Woolwich, and of course, Crossrail.”

Mr Weaver said the platform was also seeing a spike in activity in the market as buy-to-let landlords rushed to seal deals before the 3 per cent stamp duty hike on buy-to-let - as mentioned in chancellor George Osborne’s Autumn Statement - comes into play in April.