Growth in British house prices picked up speed for the second month in a row in December, helped by a shortage of homes to buy, but price increases are likely to slow in 2017, mortgage lender Halifax said on Monday.
House prices have risen more slowly since the shock decision by voters in a referendum last June to leave the European Union but surveys by Halifax and rival lender Nationwide have shown them holding up in late 2016.
The resilience has confounded the warnings of former finance minister George Osborne, one of the leading voices in the defeated “Remain” campaign to keep Britain in the EU, who said in May that house prices would fall by between 10 and 18 percent if the country voted to leave the bloc.
A Reuters poll of economists had expected an increase of 5.8 percent. The pace of growth remains below a peak of 10.0 percent hit in March 2016.
In monthly terms, house prices jumped by 1.7 percent in December, the strongest increase since March.
Martin Ellis, an economist with Halifax, said yearly price growth was expected to slow to between 1 and 4 percent by the end of 2017, held back by weaker growth in the overall economy.
“The relatively wide range for the forecast reflects the higher than normal degree of uncertainty regarding the prospects for the UK economy this year,” he said in a statement.
Prime Minister Theresa May is due to start negotiations for Britain’s departure from the EU before the end of March, kicking off a two-year process that may lead to less access to EU markets for British exporters and slower economic growth.
Halifax said on Monday there was no sign that the acute shortage of stock of homes available for sale was easing.
But Samuel Tombs, an economist with Pantheon Macroeconomics, said mortgage lending rates appeared to have hit a floor and limits on the size of loans compared to incomes were also likely to weigh on lending, cooling the momentum in house prices.
(Reporting by William Schomberg; Editing by David Milliken and Gareth Jones)