UK house prices may be heading for a Boris bounce

The latest survey of estate agents and surveyors from the Royal Institution of Chartered Surveyors is "unambiguously positive" – suggesting house prices could edge higher.

Yesterday, official statistics on UK house prices suggested that the market looked as though it was bottoming out somewhat in November, even given all the uncertainty over the election and Brexit. Now, the most timely data available on the state of activity in the housing market suggests that British residential property is now benefiting from a post-election relief rally.

Every month, the trade body, the Royal Institution of Chartered Surveyors (RICS), asks its members – estate agents and surveyors – for their views on the housing market. The latest survey covers the period from 20 December to 9 January, so it’s the first glimpse of post-election activity that we’ve had. As Samuel Tombs of Pantheon Economics puts it, “the survey is unambiguously positive.” More surveyors still reported falling prices than rising ones, but the balance was far closer to even than expected. More significantly, the balance of surveyors reporting new buyer enquiries jumped to its highest level since January 2016. And more surveyors expect prices to rise over the next three months than at any point since then too.

As we pointed out earlier, this doesn’t appear to be entirely about election nerves. According to prime property data provider LonRes, sales of prime central London property rose by a third in the last quarter of 2019, compared to the same period the year before. Prices also perked up by 2.4%, having fallen for most of the year.

It’s worth remembering that the prime market is driven to a great extent by overseas buyers. Some may have felt that the chance to buy with a huge sterling discount was at risk of slipping through their fingers, and so took a punt on Jeremy Corbyn not winning the election. That said, perhaps people simply also got fed up with waiting.

What does all of this mean for 2020? Gabriella Dickens at Capital Economics is sceptical. While transactions may “rise modestly”, house prices UK-wide remain “very high.” With mortgage interest rates very “close to their floor”, there isn’t a lot of room for rates to drop further, which is probably the key to what happens next for prices.

As we wrote yesterday, ideally we’d rather see house prices continue to lag behind rising wages. However, if the Bank of England genuinely does see scope to cut interest rates from here – as some are arguing – then there’s a risk that we won’t get our wish.

Recommended

No let up in house price rises as new records set
House prices

No let up in house price rises as new records set

House prices continued to boom in April, with £20,000 being added to the price of the average home in the last 12 months.
14 May 2021
Cheap money lifts UK house prices
Property

Cheap money lifts UK house prices

UK house prices have risen at their fastest pace in 17 years.
6 May 2021
Why are house prices so high? And what could make them more affordable?
House prices

Why are house prices so high? And what could make them more affordable?

House prices in the UK are at an all-time high – but they just keep going higher. And that’s not because of rich foreign buyers or a lack of supply, s…
23 Mar 2021
Why the Budget means house prices are likely to continue higher this year
Budget

Why the Budget means house prices are likely to continue higher this year

For a while, it looked like house prices might cool off a little this year. But after the Budget, that seems unlikely. John Stepek explains why.
4 Mar 2021

Most Popular

How will Joe Biden’s capital gains tax rise affect crypto prices?
Bitcoin & crypto

How will Joe Biden’s capital gains tax rise affect crypto prices?

The US president wants to increase capital gains tax – and that’s going to hit a lot of American cryptocurrency speculators. Saloni Sardana looks at h…
14 May 2021
US stocks look expensive – here’s what to own instead
Investment strategy

US stocks look expensive – here’s what to own instead

Right now, US stocks are among the most expensive in the world. So if you want a decent return on your investments, you should look into diversifying …
17 May 2021
Inheritance tax planning: the rules around gifting
Inheritance tax

Inheritance tax planning: the rules around gifting

There are plenty of legal ways to minimise an inheritance tax bill. Perhaps the simplest is to give away assets to reduce the size of your estate. Dav…
11 May 2021