There are 2 big reasons why UK house prices jumped again

Britain’s house prices shot up again and there are two main reasons why —
mortgage approvals rose and property supply remains at a record low.
In other words, there are not enough houses to sate demand and for those competing to buy a place, more people are getting bank approval for a mortgage, meaning competition is tougher.

Lender Halifax said in its latest house price index report that property prices in the three months to December were 9.5% than the same period in the previous year. Between October to December, house prices were 1.6% higher than in the preceding three months.

Halifax says the average house price is now at £208,286. This is still lower than the latest data from the Office for National Statistics which showed that the average property price in Britain is at £287,000.

Halifax pointed out in its snapshot of the British housing market that the volume of mortgage approvals for house purchases — a leading indicator of completed house sales — increased by 1% between October and November. On top of that, Halifax highlighted from Bank of England figures that mortgage approvals were 16% higher than in the same three months a year earlier.

Worryingly, in tandem, supply fell again to a record low because new instructions by home sellers fell in November for the tenth successive month.

“There remains, however, a substantial gap between demand and supply with the latest figures showing a further decline in the number of properties available for sale. This situation is unlikely to change significantly in the short-term, resulting in continuing upward pressure on prices,” said Martin Ellis, Halifax housing economist.

NOW WATCH: GE CEO Jeff Immelt: This one thing will drive the future of GE

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.