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UK house price growth picks up speed again

LONDON: Growth in British house prices picked up speed for the second month in a row in December, helped by a shortage of homes to buy, but price increases are likely to slow in 2017, mortgage lender Halifax said on Monday.

House prices have risen more slowly since the shock decision by voters in a referendum last June to leave the European Union but surveys by Halifax and rival lender Nationwide have shown them holding up in late 2016.

The resilience has confounded the warnings of former finance minister George Osborne, one of the leading voices in the defeated “Remain” campaign to keep Britain in the EU, who said in May that house prices would fall by between 10 and 18 per cent if the country voted to leave the bloc.

In the three months to December, house prices were 6.5 per cent higher compared with the same period a year earlier, up from growth of 6.0 per cent in the three months to November, Halifax said.

A Reuters poll of economists had expected an increase of 5.8 per cent. The pace of growth remains below a peak of 10.0 per cent hit in March 2016.

In monthly terms, house prices jumped by 1.7 per cent in December, the strongest increase since March.

Martin Ellis, an economist with Halifax, said yearly price growth was expected to slow to between 1 and 4 per cent by the end of 2017, held back by weaker growth in the overall economy.

“The relatively wide range for the forecast reflects the higher than normal degree of uncertainty regarding the prospects for the UK economy this year,” he said in a statement.

Prime Minister Theresa May is due to start negotiations for Britain’s departure from the EU before the end of March, kicking off a two-year process that may lead to less access to EU markets for British exporters and slower economic growth.

Halifax said on Monday there was no sign that the acute shortage of stock of homes available for sale was easing.

— Reuters

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