UK house prices have risen at the fastest pace since January.

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The latest Halifax house price index is out and it shows strong growth, but many in the industry still have concerns about the market. The Halifax index shows that prices rose 4.5 per cent on a rolling basis in October, up from 4.0 per cent in September, which is the highest recorded growth rate since the first two months of the year.

The causes of the high prices in the market are fairly clear: lack of available stock, unavailability of cheap mortgage finance and, at least potentially, last week’s rise in interest rates. We have seen in Edinburgh that high demand for one and two bedroom properties and a lack of supply has caused prices to rise significantly.

Halifax estimate that the average house price in the UK is now £225,826, the highest on record, and 2.8 per cent up on January prices. However, house price optimism is not particularly high. The main barrier to ownership, it seems, is the inability to raise a deposit – followed by fears about job security.

Russel Galley, managing director of Halifax Community Bank, commented on the positives and negatives: “The fact that the supply of new homes and existing properties available for sale remains low, combined with historically low mortgage rates and a high employment rate, continues to support house prices and is likely to do so over the coming months.

“Increasing pressure on household finances and continuing affordability concerns are some of the factors likely to dampen buyer demand.

“That said we do not anticipate the Base Rate rise will be a barrier to buying a house.”

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