House prices rose 9.9% last year

5 January 2007

A survey by the UK’s biggest mortgage lender has found that house prices rose by an average of 9.9% in the course of 2006.  This report from the Halifax confirms the view that house price inflation accelerated last year.  The survey was based on a sample of its own lending to customers and the prices they pay for properties.

Northern Ireland saw the biggest increases in property prices, with a rise of 53%.

But during December, the average UK house price fell by 1% to £186,035 – however, the Halifax said that didn’t necessarily mean that the market was cooling.  Chief economist Martin Ellis said: “It remains too early to conclude that this indicates a genuine slowdown in the housing market.”

Theses figures from the Halifax back up those of many other industry experts.  Last week, mortgage lender the Nationwide said house price inflation for 2006 stood at 10.5%.  This buoyancy in the housing market has confounded many experts, who’d predicted that house price rises would be much more subdued.

But in line with many market commentators, Halifax is now predicting a bit of a slowdown, following the two recent increases in interest rates – and the prospect of more to come.

Martin Ellis said:  “Higher interest rates, greater pressure on household finances and subdued real earning growth will, however, constrain housing demand.  We expect house prices to increase by 4% in 2007.”