Property professionals respond to new data revealing that house price growth has picked up speed again.
Growth in UK house prices picked up speed for the second consecutive month in December, supported by a shortage of homes for sale, Halifax said on Monday.
Fresh data from the mortgage lender shows that residential property prices rose by 1.7% to an average of £222,484 in December compared with the previous month.
The latest rise in property prices helped to ensure that growth in values rose on an annualised basis to 6.5% from 6% last month.
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.”
Responding o the latest house price figures, Jonathan Hopper, managing director of Garrington Property Finders, said that despite its brief summertime wobble, Britain’s property market ended 2016 “in rude health”.
He continued: “Its final flourish – in which the quarterly rate of price rises raced back up to levels not seen since last March’s ‘stamp duty stampede’ – showed just how well it has settled back into the familiar pattern of steady growth.
“Nearly six months on from the Brexit thunderbolt, prices are once again picking up speed slowly and steadily, even if the annual rate of growth is down on this time last year. However this time there’s no reckless acceleration, but rather a smooth and cautious progression though the gears.
“The chronic imbalance between demand and supply is playing a big part in driving up prices. With RICS data showing that levels of unsold sold stock remain at a record low, competition among buyers in many areas is rising.
Martin Ellis, Halifax Housing Economist.
“With interest rates still at record lows, growing numbers of buyers are deciding that now is the time to act – and rising levels of mortgage approvals hint at a surge in purchases to come.
“Despite the momentum, some nerves among sellers remain – and more pragmatic vendors are often willing to reduce their asking price in return for the certainty of a sale.”
Some feared house prices could nosedive post-Brexit but they have remained “reassuringly resilient” with a “robust December”, according to Rob Weaver, director of Investments at property crowdfunding platform property Partner.
He commented: “Despite an easing in annual growth, due largely to falling demand from investors, house prices have stayed stable.
“Scarcity of supply is underpinning the market with a near 30-year low in available homes for sale adding to the continuing issue of not enough residential properties being built.
“And with interest rates at rock bottom, there’s still a seemingly strong appetite from buyers whether first-time or those hoping to move up the ladder.
“Last December, the average UK house price was £208,474. A year on and the average home has risen more than £14,000 – persistent proof that bricks and mortar are a reliable store of value despite difficult conditions such as the stamp duty hike for second homes in April and EU referendum result in June.
“With good news for investors at end the year, the feeling is that house prices in 2017 – although expected to soften somewhat due to uncertainty – should continue to rise.”
Ben Madden, managing director of London-based estate agents Thorgills, believes that the latest home price figures bring into sharp focus just how hardy the property market has been in the wake of Brexit.
“While annual house prices have failed to return to the lofty heights recorded during the pre-stamp duty rush of March, 6.5% growth at the tail-end of such a tumultuous year is far better than anyone would have expected.
“Low mortgage rates have continued to attract prospective buyers to the market.
“Combined with a ongoing shortage of stock, house prices have continued to hold their own in the wake of political uncertainty.”
Halifax forecast that house prices will rise by between 1% and 4% in 2017, which is in line with most other leading forecasters.
Nationwide said it is expecting a gain of around 2% in 2017, while surveyors’ body the Royal Institution of Chartered Surveyors (RICS) forecasts 3%.
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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