In the year to the end of December 2016, house prices rose 6.5 per cent to leave the average UK house price at £222,484, according to the Halifax.
From November to December the Halifax recorded a climb of 1.7 per cent, the strongest growth since March, when economists had forecast that prices would only go up 0.3 per cent during this one-month period.
The largest house price rises were recorded in Luton, with the town seeing prices rise 19.4 per cent last year, ahead of Barking and Dagenham (East London) which saw prices jump 18.6 per cent.
A shortage of affordable housing means that potential homebuyers are likely to continue to struggle to get onto the property ladder, property experts are warning.
“Slower economic growth, pressure on employment and a squeeze on spending power, together with affordability constraints, are expected to reduce housing demand during 2017,” said Martin Ellis, Halifax’s housing economist.
“UK house prices should, however, continue to be supported by an ongoing shortage of property for sale, low levels of housebuilding, and exceptionally low interest rates.
“Overall, annual house price growth nationally is most likely expected to slow to 1-4 per cent by the end of 2017. The relatively wide range for the forecast reflects the higher than normal degree of uncertainty regarding the prospects for the UK economy this year.”
