Annual house price growth rose to 6.5% in December from 6.0% in November, Halifax’s house price index has revealed.
Prices between October and December were 2.5% higher than the three months before, while they rose by 1.7% from November to December.
Jeremy Leaf, north London estate agent and former RICS residential chairman, felt most activity was centred outside London.
He said: “The Halifax figures reflect a combination between the shortage of new and existing housing stock and a slight upturn in confidence at the end of the year as buyers try to take advantage of very low interest rates.
“However, most of the confidence seems to be found outside the M25 rather than in it, where oversupply and stamp duty on higher-priced properties is more relevant.
“Since returning to work in 2017 we have noticed a constructive realism among buyers and sellers keen to get on with their business irrespective of political and economic uncertainty.”
House price growth will slow down in 2017 according to Halifax’s housing economist Martin Ellis.
Ellis said: “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.
“Overall, annual house price growth nationally is most likely expected to slow to 1-4% by the end of 2017.
“The relatively wide range for the forecast reflects the higher than normal degree of uncertainty regarding the prospects for the UK economy this year.”
LendInvest's chief information officer and co-founder Ian Thomas and Yorkshire Building Society's chief economistAndrew McPhillips both agree.
Thomas 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."
And McPhillips said: “Although house prices grew in 2016, we expect to see little movement in the average asking price over 2017 figures.
“House prices have considerably outpaced wage growth in recent years, limiting the number of people who can afford to buy a property. This, along with wider economic uncertainty, is likely to reduce demand for properties this year.”
The town seeing the biggest increase in property prices was Luton where the average house price was 19.4% higher than the previous year.
Jeremy Duncombe, director, Legal & General Mortgage Club, said: “These figures from Halifax really highlight the seriousness of the housing crisis across the UK. In previous years, the festive period has often led to a seasonal lull in activity which has usually caused a cooling in monthly house price rises. However, the ongoing lack of supply of housing continues to push up house prices at an unsustainable level.
“Until we have taken the necessary steps to tackle this staggering deficit, including building thousands more homes across all tenures and incentivising older homeowners to downsize, this situation will only continue. There has been much noise from the Government on housing in recent months. The Government's recent confirmation of a Starter Homes Scheme and the recent £7 billion fund announced to help build affordable housing is an encouraging step in the right direction. These developments, coupled with an eagerly anticipated White Paper on its way, now is the time for the politicians to commit to a long-term, holistic solution that creates a fair housing market.”
