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UK house prices are 10% higher than last year - but a Brexit could kill growth

Apr 7, 2016, 16:36 IST

Reuters

UK house prices were 10.1% higher in the first quarter of 2016 than the same time last year, according to the Halifax building society.

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Property values in January-March 2016 were also 2.9% higher than the preceding three months, it added. The average UK house price is now £214,811 ($302,046).

Flats saw the biggest price increase since 2008 at 57%, compared to the overall average UK property rise of 37%. Terraced and semi-detached homes grew 38% and 34% respectively over the same period.

Martin Ellis, an economist for Halifax, said despite the strong market the upcoming UK referendum on the EU - known as "Brexit" - could well impact the housing market.

"Worsening sentiment regarding the prospects for the UK economy and uncertainty ahead of the EU referendum in June could result in some softening in the housing market over the next couple of months.

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"Current market conditions, however, remain very tight with an acute supply/demand imbalance continuing despite an improvement in the number of properties coming onto the market in recent months. This, together with continuing low interest rates and a healthy labour market, indicate that house price growth is set to remain robust."

The report also included a chart highlighting the difference between house price optimism and economic optimism, which suggests people are generally more confident in the housing market than the general economy:

Halifax

The economic uncertainty regarding Brexit and the recent rise in stamp duty may already be effecting certain sectors of the housing market.

As Business Insider previously reported, UK property funds saw a net retail outflow of £119 million ($171 million) in February, suggesting investors expected a slowdown or crash in the sector.

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Meanwhile prices in the London luxury property market dropped in 2015 and are "unlikely to grow" in 2016.

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