UK house prices rise 6.2% in year to Jan vs 5.7% in Dec

Average house prices in the UK have increased by 6.2% in the year to January 2017, up from 5.7% in the year to December, continuing the strong growth seen since the end of 2013, the Office for National Statistics said on Tuesday.

However, this still remains below the average annual house price growth seen in 2016 of 7.4%, the ONS said.

Month-on-month, house prices rose 0.8% in January after an increase of 0.7% in December.

The average UK house price was £218,000 in January 2017, £13,000 higher year-on-year and £1,000 higher than last December.

The main contribution to the increase in UK house prices came from England, where house prices increased by 6.5% over the year to January 2017, with the average price there now £235,000.

Wales saw house prices rise by 4.2% over the last year to stand at £146,000. In Scotland, the average price increased by 4% to £142,000, while in Northern Ireland it currently stands at £125,000, an annual increase of 5.7%.

However, the data needed to be looked at against figures for February from both the Nationwide and the Halifax showed slowing annual house price inflation, said IHS analyst Howard Archer.

"It needs to be borne in mind that the ONS’ measure of house price inflation lags many of the other measures as it is based on mortgage completions," he said.

"Despite the solid-looking January house price data from the ONS, we expect housing market activity and prices to come under increasing pressure over the coming months from deteriorating consumer fundamentals and weaker confidence," he said.

"Consequently, we suspect that house price gains over 2017 will be no more than 3% - and it could very well be less than this. We expect the fundamentals for house buyers to progressively deteriorate during 2017 with consumers’ purchasing power weakening markedly and the labour market likely softening."

Archer said increasing economic uncertainty was also likely to hit consumer confidence and "willingness to engage in major transactions such as buying a house".