UK house prices unexpectedly rose at the fastest monthly rate in almost two years in December, according to Halifax, despite warnings over the potential impact of Brexit for the year ahead.
Halifax, one of Britain’s biggest mortgage lenders, said the average cost of a home rose by 2.2% compared with November. This outstripped all forecasts in a poll of economists by Reuters, in a surprise sign of strength for the economy with less than 90 days before the UK is expected to leave the EU.
However, the figures come after a slower price inflation, against a backdrop of heightened political uncertainty and following years of rising prices that have reduced the affordability of properties. On an annual basis, house prices rose by 1.3% in the three months to December, marking the weakest year since 2012.
Hansen Lu, a property economist at the consultancy Capital Economics, said: “With prices so high relative to incomes, many buyers have been priced out of being able to purchase a home.”
The latest snapshot of the property market came as a surprise after a conflicting report from Nationwide, which suggested house price growth was 0.5% in December – the slowest annual rate since February 2013.
Analysts said the two barometers of house price inflation, which are based on each lender’s differing mortgage approval figures, can be volatile. Low numbers of property transactions, which have declined amid fears over Brexit, may also have had an influence, they added.
Jeremy Leaf, a north London estate agent and former residential chairman of the Royal Institution of Chartered Surveyors, said: “At first glance, the Halifax numbers are really positive as they reflect a time of particular political uncertainty and the height of Brexit turmoil.
“But when taken with the recent fall in transactions, it is clear that the increase has more to do with a shortage of stock rather than a bounce-back in the market generally.”
The average cost of a house in Britain is £229,729, according to Halifax, although there are significant differences across the country in house price growth. Property values in London and the south-east have either fallen or barely risen, while house price inflation has increased sharply in other parts of the country, including the midlands and the north-west of England.
Russell Galley, a managing director at Halifax, said he expected annual house price growth would remain stable between 2% and 4% this year, although warned this would depend on the Brexit outcome.
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