Property prices growing faster but Brexit will drag market down in 2017 says Halifax

House prices rose during December at the fastest monthly rate since March, said Halifax, though growth is set to slow as Brexit uncertainty weighs on the economy. The average UK house price grew by 1.7% month-on-month in December, up from 0.6% in November.

On an annual basis, house prices rose by 6.5% during the month, up from 6% in November. The average UK house price is now £224,484. That is according to the Halifax house price index for December.

"Slower economic growth, pressure on employment and a squeeze on spending power, together with affordability constraints, are expected to reduce housing demand during 2017," said Martin Ellis, housing economist at Halifax.

"UK house prices should, however, continue to be supported by an ongoing shortage of property for sale, low levels of housebuilding, and exceptionally low interest rates.

"Overall, annual house price growth nationally is most likely expected to slow to 1-4% by the end of 2017. The relatively wide range for the forecast reflects the higher than normal degree of uncertainty regarding the prospects for the UK economy this year."

On current plans, the UK government is set to trigger Article 50 by the end of March 2017, kickstarting the formal two-year negotiation process of leaving the European Union (EU). The future relationship between the UK and EU, a key trading partner, remains unclear.

"Looking ahead, the already high level of house prices is likely to curtail borrowers' ability to increase the size of their mortgage advance materially further, meaning it is unlikely that higher borrowing will chase house prices higher," said Capital Economics, a research consultancy.

"And while we are relatively upbeat on the prospects for the UK economy this year, we do see the improvement in the labour market losing steam.

"That said, there remains a distinct shortage of homes for sale. And with surveyors still not reporting any increase in sales instructions, limited supply will remain a key factor underpinning prices. Therefore, while we expect house price growth to cool, it is unlikely to fall much below 2% y/y by the end of this year."