New figures released by Halifax have revealed the average UK house price increased by nearly £4,000 in December 2016. This surge marked the fastest value acceleration since the Brexit vote in June last year.
The unexpected news comes after several economists issued gloomy warnings of a price crash after the vote to leave was made official.
In December alone, house prices rose by 1.7%, reaching a new high of £222,484. Prices in the final quarter of 2016 were 2.5% higher than the previous quarter, taking the overall increase from 2016 to 6.5%.
Which area recorded the biggest percentage rise?
Areas surrounding London saw the best average percentage increases. Luton, located 30 miles from London, recorded the biggest percentage rise among major UK cities and towns over the past year. Prices in the Bedfordshire borough jumped from £214,934 to £256,636 in 2016 - an impressive 19.4% increase.
The suburb of Barking and Dagenham, an outer eastern London borough, experienced the second highest rise in house prices. Average prices here increased by 18.6%. The top three was completed by Dunstable - Luton's neighbour - with a 17.9% rise.
Will this surge continue?
Although house prices finished strongly in 2016, experts remain divided over whether prices will begin to falter or remain robust during 2017. The long-term picture remains unclear, and house prices could face increasing pressure as 2017 progresses.
Martin Ellis, housing economist at Halifax believes affordability constraints, slower economic growth, pressure on employment and a squeeze on spending power are likely to reduce the housing demand throughout 2017.
However, he also stated UK house prices should continue to hold, which is good news for those currently looking to sell their property. Current prices will be supported by low interest rates, low levels of housing and the ongoing shortage of properties for sale.
Halifax are predicting that the annual average price growth will slow down though - to 1 to 4% over the next few months.
The UK housing market is ‘robust’
Other experts, however, are tackling this view and believe property prices will remain buoyant. Mario Berti, CEO of Octopus Property, said: “People who predicted the worst for the UK property market in the wake of the EU Referendum vote have so far been proved wrong.
“Tight supply, high levels of employment and very low borrowing costs are acting as a floor under prices. Sterling weakness will also continue to attract foreign buyers, bolstering prices.”
An imbalance between demand and supply?
Experts may not be able to agree on the future of house prices, but what does this news mean for buyers and sellers?
The current imbalance between demand and supply is likely to drive up prices. The current shortage of houses for sale in the UK will likely be beneficial for sellers. However, this imbalance will create a more competitive and fierce market for buyers.