- Values increase annual 4.5% in December vs 3.7% in November
- Prices will climb between 3% and 6% in 2016 as wages rise
U.K. house prices rose the most in eight months in December, and an improving economy and labor market will support further gains in the coming months, Nationwide Building Society said.
The average price of a home rose 0.8 percent to 196,999 pounds ($292,100) from November, the most since April, the lender said in a statement on Wednesday. The annual rate of growth accelerated to 4.5 percent in December from 3.7 percent the previous month.
Reports this year have pointed to a growing supply problem in Britain’s housing market, which is pushing up values and making it harder for first-time buyers. Prices will rise between 3 percent and 6 percent next year as falling unemployment and low borrowing costs bolster demand, Nationwide said.
“As we look ahead to 2016, the risks are skewed toward a modest acceleration in house-price growth,” Nationwide Chief Economist Robert Gardner said in the statement. “Further healthy gains in employment and rising wages are likely to bolster buyer sentiment, while borrowing costs are expected to rise only gradually.”
London housing has outperformed the rest of the U.K. this year, with values climbing 12.2 percent in the fourth quarter from a year earlier, compared with a 4.3 percent increase nationally, Nationwide said. However, with prices rising faster than wages in the city, price-growth momentum may slow.
“Prices in the south of England, and especially in London, have been outpacing the rest of the U.K. by a wide margin,” Gardner said. “With affordability metrics in the capital stretched by historic standards, another year of above-average price gains appears unlikely.”