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House prices will rise up to 6% in 2016

House price growth will slow in 2016 as buyers struggle to get on the housing ladder and interest rates potentially rise, Halifax says.

It expects national house price growth to slow to 4%-6% by the end of 2016.

Activity levels have been modest in 2015 by historical standards and the continuing shortage of supply will also constrain activity in 2016.

House price growth is expected to slow more sharply in London than elsewhere.

Growth is expected to be broadly in line with income growth beyond 2016 as steadily rising interest rates tighten affordability.

Halifax housing economist Martin Ellis said the “substantial imbalance” between supply and demand is likely to persist, maintaining upward pressure on house prices in 2016.

“On average, UK house prices look expensive compared to incomes but valuations are supported by the low levels of property for sale, low levels of housebuilding, and exceptionally low interest rates.

“Nonetheless, with house prices continuing to increase more quickly than average earnings, it is increasingly difficult to get on the housing ladder.

“This ongoing development, combined with the growing prospect of an interest rate rise, should start to put the brakes on house price growth during the course of 2016.

“Sales in 2016 are expected to be modestly higher than this year, but to remain well below the peak of 1.6 million in 2006.”

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