Advertisement

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.

Advertisement - Article continues below

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.

Advertisement - Article continues below

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.

Advertisement
Advertisement

Recommended

Are UK house prices really on the rebound?
Property

Are UK house prices really on the rebound?

The latest house price data from the Office for National Statistics paint a picture of a housing market that is showing signs of rallying. That's not …
15 Jan 2020
Have UK house prices turned the corner?
House prices

Have UK house prices turned the corner?

The average price of a house in the UK rose by 0.8% on the year in November, the fastest pace since April.
5 Dec 2019
House prices are still far too high – but things are improving slowly
House prices

House prices are still far too high – but things are improving slowly

UK house prices crept higher in November, with the strongest growth since April. But the drift towards greater affordability in Britain’s most dangero…
29 Nov 2019
Affordability improves as house prices continue their slow, sleepy decline
House prices

Affordability improves as house prices continue their slow, sleepy decline

With house prices continuing to climb more slowly than inflation or wages, the latest Halifax house price index is a further encouraging sign that the…
8 Nov 2019

Most Popular

House price crash: UK property prices are falling – so where next?
Property

House price crash: UK property prices are falling – so where next?

With UK property prices falling for the first time in eight years, are we about to see a house price crash? John Stepek looks at what’s behind the sli…
2 Jul 2020
How “support” and “resistance” can help you spot trading opportunities
Sponsored

How “support” and “resistance” can help you spot trading opportunities

Technical analysis can help traders manage risk and decide where to enter and exit a trade. One simple form of technical analysis is the concept of “s…
6 Jul 2020
The end of the bond bull market and the return of inflation
Inflation

The end of the bond bull market and the return of inflation

Central bank stimulus, surging post-lockdown demand and the end of the 40-year bond bull market. It all points to inflation, says John Stepek. Here’s …
30 Jun 2020