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House prices in UK increased 1.7% in January

Staff writer |
House prices rose by 1.7% in January compared to the previous month, according to seasonally adjusted data from Halifax.

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With December's increase also revised up to 2.0%, from 1.7%, the three-month measure of home prices in the latest three months were 2.2% higher than in the preceding three months.

Prices in the three months to January were 9.7% higher than in the same three months a year earlier, which economists noted was more than four times the increase in nominal wages. The average price of a house in the UK is now £212,430.

Halifax housing economist Martin Ellis said prices continued to be squeezed up by the country's imbalance between supply and demand.

"This situation looks set to persist over the coming months. Further ahead, increasing affordability issues, as price increases continue to exceed wage growth, are likely to curb housing demand and cause price growth to ease."

Economist Howard Archer pointed out that Halifax house price data have been much stronger than most other measures and contrast particularly markedly with the Nationwide's data.

But he agreed that while demand and supply would continue to funnel prices higher, the upside for house prices was likely to become increasingly constrained by more stretched house prices-to-earnings ratios and tighter checking of prospective mortgage borrowers by lenders.

"Furthermore, it is still very possible that interest rates could start edging up late on in 2016."

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