‘Major surprise’ as Halifax shows 4% jump in annual house prices for December

House prices recorded surprise growth of 4% across 2019 – at the highest end of previous predictions – according to an index.

Across the UK, the average house price was £238,963 in December 2019 – up by 1.7% month-on-month, the figures from Halifax showed.

Halifax’s index shows stronger house price growth across 2019 than an index released by Nationwide Building Society last week, which said property values ended 2019 1.4% higher than when the year started.

We would be cautious about reading too much into strong #Halifax #house price data. Still tends to give higher readings than other measures; Nationwide put y/y growth at 1.4% in Dec after 0.1% m/m rise. Prices may have benefited in Nov/Dec from people keen to move before Election https://t.co/34b7ovYqL4

— Howard Archer (@HowardArcherUK) January 8, 2020

Howard Archer, chief economic adviser at EY ITEM Club described Halifax’s figures as a “major surprise”.

He said: “Halifax reported that house prices jumped 1.7% month-on-month in December; this was the largest monthly increase since February 2007 and followed a marked increase of 1.2% in November.

“The year-on-year increase in house prices spiked to 4% in December; this was the largest increase since February 2018, and up from 2.1% in November.”

Mr Archer said: “It is possible that house prices got a boost in November and December from some buyers keen to get their move done before the general election to avoid any shocks or uncertainties that could arise.”

But he cautioned: “It should also be borne in mind that the Halifax measure tends to give higher house price readings than other measures.”

Halifax managing director Russell Galley said: “Average house prices rose by 4% over 2019, at the top of our predicted range of 2% to 4% growth for the year.”

He continued: “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.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: “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.”