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House prices up by 2.7 per cent

House prices up by 2.7 per cent

UK house prices increased by 2.7 per cent in the last three months of 2016 according to the Halifax House Price Index.

This signalled a rebound from the 0.6 per cent fall in the third quarter of last year.

On an annual basis, UK house prices were 6.5 per cent higher than at the same time in 2015, with the standardised UK property price now £219,556.

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Scotland saw the fastest rise in the fourth quarter with 6.5 per cent, followed by the north of England at 6.3 per cent.

Chris Williamson, chief business economist at IHS Markit said: “The recovery of house prices in the fourth quarter adds further evidence that the UK economy has shown encouraging resilience amid Brexit uncertainty.

“The latest data mean UK house prices rose by 6.5 per cent on the year in Q4 2016, a strengthening which reflected record low interest rates, high employment and improving earnings growth, as well as the ongoing shortage of houses.

“However, with rising inflation set to eat into household spending power in the coming year and Brexit uncertainties expected to intensify, it’s likely that the housing market will cool as we move through 2017.”

He predicted that house prices would rise by just 2 per cent during 2017.

Higher property prices were recorded in nine of the 12 UK regions in Q4 with Wales registering the largest decline of 6.4 per cent followed by Northern Ireland and East Anglia.

The average house price in London is currently £445,769 according to the Q4 data, which is more than double the UK number and 2 per cent more than in the third quarter.

The report said there was a “sharp divergence” in regional performance since the financial crisis.

House prices in Northern Ireland are still 42 per cent below peak while almost exactly the opposite is true in London, where prices are 38 per cent higher.

Jeremy Duncombe, director of Legal & General Mortgage Club, said: “2016 saw continued hikes in property prices across the UK.

“For London in particular, today’s report highlights the exclusivity of homeownership in the capital, with average house prices more than double those elsewhere.

“Areas along the commuter belt have also seen significant price growth over the last 12 months, as potential buyers left London in their search for affordable homes.”