UK house prices increased in the fourth quarter of 2016, with the North of England and Scotland proving to be the driving force.
The latest Halifax House Price Index reveals that a 2.7 per cent quarterly rise was observed between October and December, which wiped out the marginal 0.6 per cent fall witnessed in the third quarter.
On average, UK property prices increased to £219,556 at the end of 2016, which is up from £213,803 in the previous quarter; the £5,753 increase represents the largest quarterly spike since the second quarter of 2015.
Significant annual growth
On an annual basis, the latest figures reveal that UK house prices are 6.5 per cent higher than they were in the fourth quarter of 2015, with the increases more noticeable in certain regions.
According to the data, higher property prices were recorded in nine of the twelve UK regions during Q4 2016, compared to the previous quarter, with Scotland experiencing the fastest rate of house price inflation at 6.5 per cent.
This was followed by the North of England, which saw a 6.3 per cent rise in the fourth quarter. On a monthly basis, house prices increased by 1.7 per cent between November and December, which was the fourth successive monthly rise and the biggest since March 2016.
Indications are that total UK home sales in 2016 will be broadly similar to 2015 and 2014, sitting at 1.2 million. Sales have largely been stable since mid-2016, with a 1 per cent increase between October and November.
Mortgage approvals are also on the up, sitting 6 per cent higher than they were in the three months to November, compared with the preceding three months.
The volume of mortgage approvals for house purchases, which is a leading indicator of completed house sales, also slightly increased on a monthly basis by 0.2 per cent, which itself followed a 6 per cent rise the previous month.
Improving market optimism
The data indicates that homes sales could increase over the coming months and is a further indicator of the improving sentiment across the market, according to Chris Williamson, chief business economist at IHS Markit.
He added: “The recovery of house prices in the fourth quarter adds further evidence that the UK economy has shown encouraging resilience amid Brexit uncertainty.”
“The latest data means UK house prices rose by 6.5 per cent on the year in Q4 2016; a strengthening which reflected record low interest rates, high employment and improving earnings growth.”
It comes after a report from the Home Builders Federation revealed that house sizes are also increasing in line with house prices, driven by demand for more family homes.
According to the data, the average size of new build homes has increased by nearly 15 per cent over the past eight years, expanding from an average of 801 sq ft to 918 sq ft.
In line with the move towards larger homes being built, there has been a noticeable rise in the number of bedrooms in each house, with the total number of bedrooms being built across the UK increasing from 385,000 to 478,000 over the same period.
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