- Values rise 10% in December compared with a year earlier
- `Substantial' supply-demand imbalance to support prices
U.K. house prices surged 1.7 percent in December, according to Halifax, which said a lack of homes for sale will continue to boost values in the short term.
The average cost of a home jumped to an average 208,286 pounds ($303,500), the lender said in a statement on Thursday. From a year earlier, prices rose 10 percent. In the fourth quarter, values increased 1.6 percent from the previous three months.
A shortage of homes on the market is pushing up values, and affordability is being stretched as price gains outpace wage inflation. While Halifax said there were possibly some signs in the quarterly numbers of a slowdown in underlying price growth, the number of properties for sale had declined further, a trend that remains the dominant force in the market.
U.K. Prime Minister David Cameron said Monday that the government plans to spend 1.2 billion pounds preparing former industrial sites for house-building as part of an effort to bring down the cost of home ownership for young people. Ministers said the policy will deliver 30,000 cheaper homes over the next five years.
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Persimmon Plc, a York, England based housing builder and developer, said Thursday that it opened over 250 development sites across the U.K. in 2015 and completed homes increased by 8 percent last year.
There is a “substantial gap between demand and supply,” Martin Ellis, an economist at Halifax, said in a statement. “This situation is unlikely to change significantly in the short-term, resulting in continuing upward pressure on prices.”