LONDON: British house prices jumped in December by the most in monthly terms in nearly 13 years but the market is likely to show only a modest recovery, mortgage lender Halifax said on Wednesday.

Prices rose by 1.7 per cent last month from their level in November, the biggest monthly increase since February 2007, and up from a rise of 1.2 per cent in November, Halifax said.

In annual terms, house prices were up 4.0 per cent year-on-year, the biggest such increase since February 2018, after a 2.1 per cent rise in November.

Halifax said its index covered the full month of December, during which Prime Minister Boris Johnson won an emphatic election victory, removing uncertainty about whether Britain will leave the European Union on January 31.

Russell Galley, Halifax’s managing director, said the increased clarity for the economy should lead to higher transaction volumes and further price growth.

“Longer-term issues such as the shortage of homes for sale and low levels of house-building will continue to limit supply, while the ongoing challenges faced by prospective buyers in raising deposits will serve to constrain demand,” he said.

“As a result, we expect a modest pace of gains to continue into next year.” Last week, rival mortgage lender Nationwide said its measure of British house prices rose in annual terms by more than 1 per cent for the first time in over 12 months in December.