House prices rise by 9.5% after December surge

Ryan Bembridge

January 7, 2016

House prices rose by 9.5% in the year to December after increasing by 1.7% from November, Halifax’s House Price Index has revealed.

In the three months to December house price inflation was 1.6%, the second successive month growth was below 2%.

The biggest price rises took place in Newham in London, where the typical house price was 22% higher than the previous year.

Mark Posniak, managing director of Dragonfly Property Finance, said: “In the current environment, seasonal trends are arguably becoming less significant.

“With supply as weak as demand is strong, it’s same old, same old on the house price front. Prices continue to rise, if at a slightly steadier rate over the quarter. The 1.7% rise in December drives home the extent of demand.

“Looking into 2016, it’s hard to see anything other than a continuation of the current trend of steadily rising prices, especially with interest rate rises in the near future unlikely. The jobs market is strong, consumers are confident and mortgage rates remain very low. Against this backdrop, further price rises are almost inevitable.”

New instructions by home sellers fell in November for the 10th successive month, contributing to available stock declining for the eighth month in a row.

Despite the lack of stock homes sales from September to November were 5.2% higher than in the same three months last year.

Jeremy Duncombe, director of Legal & General Mortgage Club, said: “This week’s announcement from the government committing to directly deliver 10,000 new homes on public land is to be welcomed. Measures such as this will go some way to address the UK’s housing crisis.

“However, more must be done to tackle the current cycle of rising demand and a lack of supply which is locking an increasing number of people out of homeownership.

“The government must commit to a serious house building programme to construct thousands of new homes across the country every year.”

He added: “Incentives to help unlock the vast amount of property in the hands of existing homeowners who are living in homes which no longer fit their circumstances, would also be welcomed.

“Tax breaks and reductions in stamp duty for this sector of the market should be encouraged to help more people to ‘rightsize’ and free up a significant amount of housing stock. By doing this, we can better ensure more people are able to take their first or next step on the housing ladder in the future.”

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