British house prices rise the most in eight months

UK house prices rose the most in eight months in December, and an improving economy and labour market will support further gains in the coming months, Nationwide Building Society said.

The average price of a UK home rose 0.8% to £196,999 (€180,000) from November, the most since April, the lender said in a statement yesterday.

The annual rate of growth accelerated to 4.5% in December from 3.7% the previous month.

Reports this year have pointed to a growing supply problem in Britain’s housing market, which is pushing up values and making it harder for first-time buyers.

Prices will rise 3% to 6% next year as falling unemployment and low borrowing costs bolster demand, Nationwide said.

“As we look ahead to 2016, the risks are skewed toward a modest acceleration in house-price growth,” Nationwide chief economist Robert Gardner said.

“Further healthy gains in employment and rising wages are likely to bolster buyer sentiment, while borrowing costs are expected to rise only gradually.”

London housing has outperformed the rest of the UK this year, with values climbing 12.2% in the fourth quarter from a year earlier, compared with a 4.3% increase nationally, Nationwide said.

However, with prices rising faster than wages in the city, price-growth momentum may slow.