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Published: Sat, December 31, 2016
Economy | By Melissa Porter

United Kingdom house prices rise in December - Nationwide

United Kingdom house prices rise in December - Nationwide

According to its latest House Price Index, average prices have grown by 4.5% over the last 12 months, the same rate as in 2015.

"Like most forecasters, including the Bank of England, we expect the United Kingdom economy to slow modestly next year, which is likely to result in less robust labor-market conditions and modestly slower house-price growth", he said.

But, on the other hand, an ongoing shortage of properties for sale and low interest rates keeping mortgages relatively cheap will help to support house prices generally across the United Kingdom, the report said.

Yet the average cost of buying a property in London remains more than double the national average of £205,937.

On a monthly basis, prices rose 0.8 per cent, up from no growth in November.

All 10 top performers were in London and the South East of England.

Robert Gardner, Nationwide's chief economist, said: "There were signs that London's significant period of outperformance may be drawing to a close".

"As the London market is expected to be slower in 2017, established markets such as Clapham, Balham and Wandsworth should remain solid", says Rob Weaver, Director of Investments at property crowdfunding platform Property Partner. It looked at a typical first-time buyer property in a region, presumed the buyer had a 20 per cent deposit and was borrowing four times their (single) income.

The data concludes that affordability has improved in Scotland, the North, East Midland and Northern Ireland in the last ten years.

"The real test for the market will come in the early new year when we see whether continuing low mortgage rates and lack of new and existing housing supply prove more relevant than uncertainty over unemployment, inflation and the wider economy post-Brexit", he added.

"The fact that the housing market is seemingly struggling to build momentum after coming modestly off its August lows reinforces our suspicion that it is likely to find life increasingly hard as 2017 progresses", Reuters reported, citing Howard Archer, Chief UK and European Economist, IHS Markit.

"The combination of record low borrowing rates propping up demand and a severe shortage of both housing stock and available homes for sale has meant prices have continued to rise".

Price growth in London fell to 3.7%, down from 12.2% in 2015.

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