Government figures add to house price hype

Monday, 13 February 2006 12:00

Annual growth in house prices picked up in December, according to the latest government figures.

This new data from the Office of the Deputy Prime Minister (ODPM) adds to the general good news about UK house prices in the final months of 2005, with the initial figures for 2006 also showing steady progress.

According to the ODPM, house prices in December were 2.9 per cent higher than the same month a year earlier, a 0.7 per cent increase on November's figures.

And the government department are not alone in recording price rises.

For December Nationwide saw a 0.5 per cent increase in house prices, Halifax recorded a 0.9 per cent rise, Hometrack calculated property values rose by 0.1 per cent, while FT/Academetrics saw a 0.2 per cent rise.

For January Nationwide, Hometrack, Rightmove, and the FT have recorded further rises in house prices - with the only fall recorded by Halifax, but this drop was less than half as large as December's rise.

"The climb in annual house price inflation to 2.9 per cent in December, from 2.2 per cent in November . . . reported by the ODPM adds to the recent evidence that house prices have firmed to a limited degree recently amid stronger housing market activity and increased buyer interest," said Howard Archer, chief UK economist at the Global Insight consultancy.

But he was not confident that this would lead to a renewed surge in property values.

"While stronger housing market activity seems likely to put a floor under house prices, we remain sceptical that house prices will see sustained sharp rises over the coming months," Mr Archer noted.

"We expect the upside for house prices to be contained by stretched affordability ratios on many measures, elevated debt levels and a further weakening in the labour market. Indeed, affordability will suffer over the coming months from moderate earnings growth as well as increased utility and council tax bills."

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