House prices jump another £3,500 in January

The collapse in the supply of houses for sale has forced prices to new highs with an average increase of £3,500 in January.

The average property price rose 1.7% last month and 9.7% over one year to £212,430, according to the latest Halifax house price index.

January saw the pace of growth increase compared to average house price growth of £2,000 a month since last July, pushing up the cost of the average home by £13,131.

Martin Ellis, Halifax’s housing economist, said: “The imbalance between supply and demand continues to exert significant upward pressure on house prices."

He said this will continue for several months before eventually slowing. 

“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.”

Jeremy Duncombe, director of Legal & General Mortgage Club, said long-term trends show house prices are still rising significantly. "They are continuing to climb at a rate that far exceeds inflation and wage growth.

“This is eroding people’s ability to get on the property ladder, as the average asking price is rising faster than prospective buyers can save money for a deposit."

Duncombe said the trend is likely to continue well into 2016 unless more properties are built to cope with current levels of demand.

“We need to ensure that there is an adequate supply of suitable properties for home-movers in order to create a more fluid housing market and encourage more efficient use of current housing stock.”