LONDON (Reuters] – British house prices grew at an unprecedented pace over the past three month, according to Halifax mortgage lender. It was due to a dearth of housing, a weak job market and high borrowing costs.

According to Lloyds Banking Group’s monthly figures (LON), house prices increased by 3.4% over the last three months of November. This is the largest increase since late 2006. They are also 8.2% higher than one year ago.

Russell Galley (managing director at Halifax) stated that “the performance of the market remains to be underpinned by an shortage of properties, strong labour markets and keen competition between mortgage providers keeping rates close historical lows.”

The Bank of England will begin raising interest rates over the next months to offset their low of 0.1%. However, the Omicron coronavirus has caused markets to split about whether it will be done at next week’s policy meeting.

Halifax stated that November saw a 1.0% increase in house prices, which was the same percentage as October.

British house prices rose strongly during the COVID-19 pandemic. This is in keeping with other large economies and reflecting increased home-work opportunities as well as temporary tax incentives for people to buy a house.

Most recent figures show that September’s house prices, which was the month in which the tax cut applied, was 11.8% more than one year prior. That is less than the peak 12.6% seen in June 2003, when the tax incentive began to fade in England.

Halifax stated that there are signs of a shift towards more central, larger housing. Prices for apartments have risen faster than detached homes.

Galley explained that it was unlikely the current house price increase will continue in 2019, given the historical high house prices to income ratios. Also, household budgets could be under more pressure over the next few months.