House price growth has hit a 17 month-high, as the supply of new properties being put up for sale tightens.
UK house prices rose 9.7pc in the year to January, up from 9.5pc a month earlier, according to the Halifax. This is the biggest jump since in July 2014, when prices rose by more than 10pc.
On a month-on-month basis, values increased by 1.7pc, taking the average cost of a home to £212,430, the lender’s monthly house price index showed.
“The imbalance between supply and demand continues to exert significant upward pressure on house prices,” said Martin Ellis, Halifax’s housing economist.
“This situation looks set to persist over the coming months. Further ahead, increasing affordability issues, as price increases continue to exceed wage growth, are likely to curb housing demand and cause price growth to ease.”
Some experts believe the housing market is being lifted in the short term by buy-to-let investors looking to make a purchase before the sector is hit with a rise in stamp duty in April.
However, demand could fall away as and when interest rates start to rise, and mortgage lenders begin to stress-test applicants more rigorously. This is not yet showing in the Halifax figures.
“The sobriety in the market is not being evidenced in the Halifax Index,” said Lucian Cook, head of residential research at Savills.
The Halifax House Price Index takes average house movement across the UK, and therefore giving a blanket, one-size-fits-all account of the many different, regional markets in Britain. The luxury market in London and the countryside have been muted by aggressive tax policy, while demand to buy in the cheaper spots in the south-east commuter belt remains strong.
“Supply is likely to stay scarce, agents chasing listings had forced asking prices too high and a combination of this and scaremongering on interest rates by the Bank of England did dampen thighs a bit. But as agents start to reduce asking prices the market will move and prices will most likely accelerate again,” said Ed Mead, head of Douglas & Gordon.
Source : http://www.telegraph.co.uk/