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Annual UK house price growth nears 10%

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The rate of growth in UK house prices reached almost 10 per cent in the 12 months to January 2016, according to the latest report from Lloyds Banking Group.

There was a 9.7 per cent increase in home values between January 2015 and the same month this year, the Halifax House Price index reveals, with a 1.7 per cent monthly increase also observed.

The rise was higher than the 9.5 per cent recorded in the 12 months to December and now means that the annual rate has remained in a narrow range between 8 per cent and 10 per cent for more than a year.

The increase has been complemented by strong confidence in the housing market, with the latest quarterly Halifax Housing Market Confidence Tracker posting a rise in optimism.

In the final quarter of 2015, the majority of people surveyed said they believed that average UK property prices would be higher in 12 months’ time, rather than lower.

The number of homes being sold has also continued to pick up pace, with a steady increase observed since last summer.

UK property sales totalled 1.23 million in 2015, which is higher than the 1.22 million recorded in 2014, and was catalysed by transactions in the second half of 2015 being six per cent higher than in the same period the year before.

Mortgage approvals were also slightly higher in late 2015, with the volume of approvals for house purchases – which is a leading indicator of completed house sales – increasing by 1% between the third and fourth quarters of the year.

Approvals in the final three months of 2015 were 18 per cent higher than in the same period a year earlier, illustrating increasing lender activity.

Halifax housing economist Martin Ellis said that house price growth will continue to increase in the months ahead, but this will eventually begin to ease in line with other economic factors.

IHS Global Insight economist Howard Archer added that the market was being supported by "helpful fundamentals, notably including decent real earnings growth, high and rising employment, relatively elevated consumer confidence, and ongoing very low mortgage interest rates”.

According to the Halifax House Price Index, the average price of a UK home now stands at £212,430.