House prices bounced £4,000 in December to deliver a 4% rise in 2019, but Halifax forecasts only ‘modest’ gains for the year ahead
- Halifax said average house price rose £9,000 to £238,963 in 2019
- But bank’s house price figures have consistently outstripped rival reports
- Nationwide last week reported house price inflation of 1.4% for 2019
- Britain’s biggest mortgage lender forecasts small property price gain in 2020
House prices rose 4 per cent in 2019, according to Britain’s biggest mortgage lender Halifax, as a December bounce saw the average property’s value jump £4,000.
The Halifax index showed the average house price climbed £9,136 last year to £238,963, but the bank said that it only expected ‘modest’ rises in the year ahead.
Halifax’s figures are based on the lender’s own mortgage approvals and have consistently outstripped rival reports over the past year.
Halifax said that a £4,000 December bounce in house prices led to 4% property inflation in 2019, but the lender’s figures have regularly outstripped those of rivals
Rival mortgage lending giant, Nationwide Building Society, reported last week that its index showed house prices rising just 1.4 per cent in 2019, with the average property value up £4,126 to £215,282.
Official house price statistics from the ONS / Land Registry, based on sold prices, lag both the big mortgage lenders’ reports and showed the average property up 0.7 per cent in the year to October.
Property industry commentators have suggested over the past year that the Halifax index may be overcooking house price rises, but Jeremy Leaf, a north London estate agent and Rics residential chairman, said it had ‘proved to be a reliable indicator of property market activity over many years so is widely respected’.
He added: ‘On the back of the largest monthly increase for the year in November, prices are up even more in December on a monthly and annualised basis.
‘But price rises are reflecting more of a shortage of stock at the moment than significant increases in demand and not widely in London where affordability is most stretched.’
‘On the ground, there is no doubt that the election and more certainty on Brexit is contributing to recovery in market confidence. Looking forward, we expect higher increases in values in areas where the ratio of house prices to earnings is lower.’
Halifax’s chart shows the dramatic pick-up in annual property inflation at the end of last year
Halifax managing director Russell Galley said that the 4 per cent rise for 2019 was at the top of its 2 to 4 per cent expectation for the year.
He said: ‘This was driven by a monthly gain of 1.7 per cent in December which was the biggest monthly increase of 2019, pushing up the year-on-year growth rate and reflecting that December 2018 was a particularly weak month.
‘Looking ahead, we expect uncertainty in the economy to ease somewhat in 2020, which should see transaction volumes increase and further price growth made possible by an improvement in households’ real incomes.
‘Longer-term issues such as the shortage of homes for sale and low levels of house-building will continue to limit supply, while the ongoing challenges faced by prospective buyers in raising deposits will serve to constrain demand.
‘As a result, we expect a modest pace of gains to continue into next year.’
The bank has forecast gains of 1 to 3 per cent for house prices in 2020.
Nationwide broke down how house prices changed across the different UK regions in 2019
Britain’s biggest building society Nationwide released its end-of-year house price figures last week, saying that the average property rose 1.4 per cent in December.
That came alongside a 0.1 per cent rise in house prices in December, in stark contrast to Halifax’s claimed 1.7 per cent monthly rise. Nationwide’s gain was also delivered by the statistical manipulation of seasonal adjustment, as the average home’s value on its index actually slipped £452 in December.
Nationwide’s regional breakdown showed diverging fortunes for property markets across the UK last year.
In London house prices were down 1.7 per cent, while the Outer South East saw a 0.6 per cent fall, whereas Northern Ireland saw a 3.4 per cent rise, whole prices climbed 2.9 per cent in Wales, 2.5 per cent in the North West and 2.1 per cent in the West Midlands.
Nationwide’s house price index recorded substantially lower property inflation of 1.4 per cent last year, but it too saw an end-of-year pick-up