Interest rate rise proves demand catalyst, not killer.

Slightly curious house price data emerged from the Halifax at the tail end of last week. While the annual picture is of a market that continues to slow down, with growth of just under 4%, in the three months to the end of November prices actually rose by 2.4%, the fastest three-month rise since January of this year.

In November alone they rose by 0.5%, which is a pretty healthy innings in the current climate. So while the market is in slowdown mode overall, it seems to have woken up a bit in recent months. This seems a bit odd given that rates have just gone up for the first time since 2007.

Dig deeper, though, and it seems the improved performance of the market in the past quarter suggests the first interest rate rise in a decade served to ignite, rather than temper, demand. Based on this evidence, the build-up to the November rate rise, and then the rise itself, brought prospective buyers out into the open rather than sent them underground. It was a demand catalyst rather than a demand killer.

The likelihood, during September, October and, post-rise, November, is that many buyers came to the conclusion that it is better to move now while mortgage rates are still low than further down the line when they could be less competitive. This put upward pressure on prices.

To put it another way, we may have had the first interest rate rise for a decade but rates are still not far off all-time lows. So if you are going to lock into a decent rate, many people seem to have concluded, it’s probably best not to delay, as the best rates are arguably on borrowed time.

You suspect that Brexit-related uncertainty is also a factor for many households. As things stand, it's hard to know how things will pan out for the UK economy — and against that backdrop moving now for many households will be seen as the better option.

There's also a sense among UK buyers that prices are unlikely to fall much even if the economy does hit a few road bumps. The reason for this, you guessed, is the sheer lack of homes both for sale and being built

Or in the words of Russell Galley, Managing Director, Halifax Community Bank: "The imbalance between supply and demand continues to support house prices, which doesn’t look like changing in the near future." Now that's something I think we can all agree is correct.