UK house prices continue to rise in January, Land Registry reveals

The Land Registry said house prices in England and Wales rose 2.5% in January compared to the previous month, pushing the year-on-year gain to a 14-month high of 7.1%. The figures marked a further pick-up in growth from December’s month-on-month increase of 0.5% and year-on-year rise of 5.5%.

The number of house purchases, however, decreased over the past year as demand continued to outpace the supply of homes. An average of 78,652 sales per month were made between August and November in 2015, compared to 81,656 sales per month the same period a year earlier.

The report follows data from the British Bankers Association on Wednesday which showed mortgage approvals for house purchases rose to a 23-month high of 47,509 in January compared to December’s seven-month low of 43,660.

“Latest data from the British Bankers Association clearly point to housing market activity currently being lifted by buy-to-let investors and second home buyers looking to make a purchase before April’s rise in Stamp Duty for the sectors,” said Howard Archer, chief UK and European economist at IHS Global Insight.

“This could well exert upward pressure on house prices in the near term. Post April, this move may modestly dilute housing market activity and upward pressure on prices.”

IHS estimates that house prices will grow between 6-7% over 2016, fuelled by rising expectations that interest rates will not increase this year and by a relative shortage of properties.

However, Archer said there was a potential downside risk to housing market activity and prices due to the possibility of Britain voting to leave the European Union in a referendum on 23 June.

“A vote for Brexit would be liable to see a marked hit to UK economic activity over the rest of this year and in 2017 amid heightened uncertainties, which would likely weigh down heavily on the housing market,” he said.