* Prices rise 4.5 pct y/y, faster than expected
* Nationwide says house price growth to slow in 2017
* Shortage of new homes expected to underpin prices
(Adds reaction, detail)
LONDON, Dec 29 British house prices rose faster
than expected in December, but the pace of growth is likely to
slow in 2017 amid uncertainty about economic developments,
mortgage lender Nationwide said on Thursday.
Annual gains stood at 4.5 percent in December, up from 4.4
percent in November. Economists polled this month by Reuters had
expected to see growth of 3.8 percent.
Britain's property market slowed immediately after the vote
in June to leave the European Union, but since then the economy
has fared better then many economists expected and house prices
have continued to rise.
Nationwide reiterated a forecast that house prices are
likely to grow by around 2 percent in 2017, although the figure
would depend on how the economy fares.
"The fact that the housing market is seemingly struggling to
build momentum after coming modestly off its August lows
reinforces our suspicion that it is likely to find life
increasingly difficult as 2017 progresses," said Howard Archer,
chief UK and European economist at IHS Markit.
Nationwide said low interest rates and a shortage of homes
are expected to underpin support for prices.
Bovis Homes said on Wednesday it would not deliver
the number of houses it originally expected in 2016, after about
180 sales failed to complete before the year end, resulting in a
likely miss against market profit forecasts.
In December alone, house prices rose 0.8 percent after
stagnating in November, Nationwide said. While the
month-on-month measure can be volatile, this marked the biggest
rise in a year.
Nationwide said 2016 was the first year since 2008 that
house price growth in London was slower than the British
(Reporting by Andy Bruce; Editing by Elaine Hardcastle and John