House prices rise for first time since March
House prices have picked up speed for the first time since March, but will slow in the next year as the market loses momentum.
Halifax’s price index recorded a 6pc annual increase in house prices in the three months to November, up from last month’s figure of 5.2pc. Home prices increased by just 0.2pc month-on-month, and the average UK house price is now £218,000.
Despite the slight increase in growth Hansen Lu, an analyst at Capital Economics, said that the market “is still losing momentum”. He said: “With house prices very high and some buyers still cautious following the Brexit vote, we expect the slowdown to be extended well into next year.”
He added that affordability is stretched, and potential homebuyers’ “ability to borrow more to bid up home prices is becoming increasingly constrained”.
Howard Archer, an analyst at IHS Global Insight, said that home prices look likely to rise modestly in the near term, but will slow down at the end of next year to around 2pc.
He added: “We believe the fundamentals for home buyers will progressively deteriorate during 2017 with consumers’ purchasing power weakening markedly and the labour market likely softening.”
He said that the low supply of homes for sale, as reported by the Royal Institution of Chartered Surveyors, means that any softening in house prices would be limited.
House prices picked up pace in November and will keep rising in the months ahead, but a slowdown in activity next year will hurt the economy, according to the Royal Institution of Chartered Surveyors (Rics).
Looking ahead, 14 per cent expected prices to increase in the next three months, while 40 per cent predicted rises over the next year, “except in London, where the long-term outlook is much weaker”.
These figures tie in with a Halifax report this week showing annual house price increases picking up pace last month and a Reuters [2] poll of experts by Reuters that predicted growth of two per cent next year.