U.K. house prices increased the most in eight months in December as a strong labor market underpinned buyer demand amid shortage of properties.
House prices grew 0.8 percent in December, faster than the 0.1 percent gain seen in November, data from the Nationwide Building Society showed Wednesday.
This was the fastest growth since April, when prices climbed 1 percent and also exceeded an expected growth of 0.4 percent.
House prices advanced 4.5 percent from a year ago in December, the fastest since May. Economists had forecast house price growth to rise marginally to 3.8 percent from 3.7 percent.
“As we look ahead to 2016, the risks are skewed towards a modest acceleration in house price growth, at least at the national level, despite the likelihood of interest rate increases from the middle of next year,” Robert Gardner, Nationwide’s chief economist, said.
Gardner forecasts prices to rise by 3-6 percent over the next twelve months. The economist said while healthy gains in employment and rising wages are likely to bolster buyer sentiment, the main concern is that construction activity will lag behind strengthening demand.
IHS Global Insight Economist Howard Archer said data reinforces the assessment that house prices are likely to see solid increases over the coming months.
Nonetheless, the upside for house prices is expected to be constrained by more stretched house prices to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the probability that interest rates will start rising gradually during 2016, Archer noted.
Average house prices in England increased by 2.2 percent in the fourth quarter, and were up 6.9 percent year-on-year.
Further, data showed that all regions except Scotland registered increases in house prices in 2015, though all reported slower rates of annual price growth than in 2014.
London was the strongest performing region for the fifth consecutive year, with average prices rising 12 percent annually.
The material has been provided by InstaForex Company – www.instaforex.com