Average property prices in England and Wales increased year on year by 6.4% in December, taking the average property value to £188,270, the latest index shows.
Month on month house prices rose by 1.2% since November 2015, according to the monthly index report from the Land Registry.
London recorded the greatest increase in its average property values with annual growth of 12.4% and the biggest month on month rise at 2.1%, taking the average price to £514,097.
The North East saw the lowest annual price growth with an increase of 0.8%, taking the average price to £99,069, a considerable difference to the average price in London. Wales saw the most significant monthly price fall with a decrease of 0.8% to take the average price to £121,780.
The most up to date figures available, show that the number of completed house sales in England and Wales fell by 8% to 79,960 compared with 86,452 in in October 2014 while the number of properties sold for more than £1 million fell by 2% to 1,231 from 1,258 a year earlier.
Repossessions in England and Wales fell by 51% to 431 compared with 888 in October 2014 and the region with the greatest fall in the number of repossession sales was London with a fall of 71% from October 2014.
Mark Posniak, managing director at Dragonfly Property Finance, pointed out that with demand strong and supply weak, prices in December defied the usual seasonal slowdown, adding that this is even more pronounced in London.
He believes that the construction lag is having a significant impact on the market. ‘On a more positive note, we are seeing noticeably more construction activity at the moment, particularly by smaller developers. But this will take time to trickle through into the market,’ he said.
‘Looking into 2016, it’s hard to see anything other than a continuation of the current trend of steadily rising prices, especially with interest rates unlikely to rise in the near future and a robust jobs market,’ he added.
According to John Eastgate, sales and marketing director of OneSavings Bank, prolific buyer demand is fanning the house price growth. ‘A strengthening labour market, robust consumer sentiment and a supportive mortgage market all played their part, despite the obstacles provided by the festive period. This strength of demand has been compounded by the record low levels of property on the market at present,’ he said.
‘Uncertainty around economic growth in 2016 provides a reason for caution. The good news however, is that house building starts appear to be at their highest level since 2007. It is not yet strong enough to counterbalance demand. However if this trend of improvement is maintained, it should lead to a healthier property market for investors and buyers alike,’ he added.
The lack of supply is also the explanation of what is currently happening with unseasonal growth in the market, said Jonathan Hopper, managing director of the buying agents Garrington Property Finders. ‘Even though the NHBC this week announced that house building in 2015 hit its highest level since 2007, the supply of homes is still falling far short of demand,’ he pointed out.
He also explained that London and the South East do not have the monopoly on low supply and estate agents in many areas are struggling with a severe shortage of stock in several price brackets.
‘But there’s a huge disparity across the market. The hike in stamp duty on the most expensive homes has caused sales of £2 million plus properties to slump by 17% in a year, while at the more mid-market £500,000 band, sales are up by a third,’ said Hopper.
‘Britain’s economic fundamentals remain strong, and together these factors will continue to stoke demand well beyond what current supply can meet. The inevitable result is continued house price inflation in early 2016,’ he concluded.
Rob Weaver, director of Investments at property crowdfunding platform Property Partner, pointed out that prices in outer London boroughs over the past year have been powering ahead. ‘Potential buyers have been searching outside prime central London for more affordable housing, attracted also by regeneration in places like Thamesmead and Woolwich, and of course, Crossrail,’ he said.
‘We’ve also seen significant upward trends west of the capital and on the M4 corridor with commuter towns like Reading, Slough, Windsor and Maidenhead racing ahead. This is clear evidence that the UK housing market is incredibly diverse across the regions, highlighting a north-south divide with Yorkshire and The Humber and the North East seeing tiny annual increases,’ he added.