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UK House Price Inflation Accelerates In December: Halifax

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UK house price inflation accelerated in December after slowing in the previous month, though house price growth for 2018 remain thin, survey data from the Lloyds Bank unit Halifax showed on Tuesday.

House price rose 1.3 percent year-on-year in the three months to December, which was faster than the 0.3 percent growth in the three months to November. Economists had expected a 0.4 percent increase.

On a month-on-month basis, house prices grew 2.2 percent in December after a 1.2 percent fall in November. Economists had forecast a 0.5 percent increase.

House prices fell 0.4 percent in the October to December from the July to September quarter.

In December, the average house price was GBP 229,729 versus GBP 224,860 in the previous month.

"Overall, house price growth in 2018 was very much within the range of 0-3 percent as we forecast at the start of the year," Halifax Managing Director Russell Galley said.

"In 2019, we're expecting continued stability in house prices with between 2 percent and 4 percent price inflation."

The "fairly subdued" expectation will clearly be dependent on the Brexit outcome, with risks to both sides of our forecast, Galley added.

Other factors that could impact the housing market include the need to raise a significant deposit that still acts as a restraint for those looking to buy a new home, limiting the number of potential purchasers, Halifax said.

While the signs of positive annual pay growth support affordability, risks associated with the potential for higher interest rates could hurt demand.

"On balance we do not see affordability pushing house price growth significantly in either direction," Galley said.

"The shortage of homes for sale and continuing low levels of house building both constrain the supply of houses, and in turn support high prices, which will continue to inhibit demand in 2019."

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