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UK economy sees December house price rise

UK economy sees December house price rise

The price of the average house in the UK rose strongly in December, according to the latest survey from Nationwide.

The building society's research revealed a 0.8% increase in value, compared to only 0.1% in the previous month of November.

2015 figures

Nationwide's figures show that house prices rose over the whole year by 4.5% overall and that the average property in the UK is now worth £196,999.

Official figures from the Land Registry for England and Wales had the increase even higher at 5.6% in year-on-year to November. According to their figures, a flat or house in the UK now has an average price of £186,325.

More figures, this time from rival building society Halifax, found that property prices have been going up twice as much, claiming an increase of 9% in the year to November.

UK economy

The effects on the wider UK economy are complicated. On the one hand, higher property values mean more wealth for households, but on the other, affordability issues can affect market volatility.

Nationwide said the growth in house prices was comparable to the growth in average salaries and expected that trend to continue into 2016.

However, with average prices in London up 12% compared with a year ago, Nationwide pointed out that buying a property in the capital was becoming unaffordable for many.

Nationwide's chief economist Robert Gardner commented: "Further healthy gains in employment and rising wages are likely to bolster buyer sentiment, while borrowing costs are expected to rise only gradually. However, the main concern is that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability." 

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