Will house prices rise next year?
House prices will rise by between four and six per cent across the UK during 2016, according to predictions released today by Halifax.
This would represent a slowing in price increases, which the lender puts down to an increased difficulty getting onto the ladder, along with the possiblity of interest rate rises. These two factors combined could put the brakes on property price growth.
Price growth is expected to slow more sharply in London than elsewhere, although all regions are expected to experience price rises in 2016.
There is a still a shortage of supply which constrains activity in the housing market, and levels of housebuilding remain low. However, Halifax said it expect improvements in the numbers of houses built over the medium-term which would bring demand and supply into better balance, and help to stop prices spiraling upwards.
Halifax’s housing economist, Martin Ellis, said: “There is little reason to expect any fundamental shift in the key market drivers in the immediate future. As a result, the substantial imbalance between supply and demand is likely to persist, maintaining upward pressure on house prices in 2016.
“On average, UK house prices look expensive compared to incomes but valuations are supported by the low levels of property for sale, low levels of housebuilding, and exceptionally low interest rates.
“Nonetheless, with house prices continuing to increase more quickly than average earnings, it is increasingly difficult to get on the housing ladder. This ongoing development, combined with the growing prospect of an interest rate rise, should start to put the brakes on house price growth during the course of 2016. Annual house price growth nationally is expected to slow to 4-6% by the end of 2016.
“A continuing shortage of supply is likely to continue to act as a significant constraint on activity over the coming year. Sales in 2016 are expected to be modestly higher than this year, but to remain well below the peak of 1.6m in 2006.”