House prices ended the year with strong growth of 0.8 per cent
in the month of December according to the building society Nationwide.
This took the average value of property in the UK is now
£196,999, up 4.5 per cent compared with a year ago. London remained the
strongest performing region for the fifth year running, with average prices up
12 per cent in 12 months.
London’s average values are now 50 per cent above their
pre-crisis peak in 2007 - a sharp contrast to, say, Northern Ireland which
remains 44 per cent below its pre-crisis peak, despite rising by 6.5 per cent
in the last three months of the year.
But the capital will not be such a success in 2016 because of
widespread unaffordability across boroughs, says the building society.
UK-wide, prices are around 7.0 per cent higher than a year ago
with Scotland the only part that saw a fall, with values down 1.9 per cent in
the three months to the end of December compared with the same period a year
ago.
"Further healthy gains in employment and rising wages are
likely to bolster buyer sentiment, while borrowing costs are expected to rise
only gradually. However, the main concern is that construction activity will
lag behind strengthening demand, putting upward pressure on house prices and
eventually reducing affordability" according to Robert Gardner,
Nationwide's chief economist.
On Twitter, Howard Archer - chief UK and European economist at
IHS Global Insight - says the Nationwide figures back up his firm’s forecast
house price growth of 6.0 per cent in 2016.
Meanwhile Jeremy Leaf, former RICS chairman and north London
estate agent, says: ‘Supply is simply not increasing fast enough to keep
house prices in check and is making it harder for first-time buyers to get on
the ladder. The situation is likely to get worse before it gets better in view
of the build up to the increase in stamp duty in April, particularly as these
[Nationwide] figures are a little historic.”
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