The UK property market appears to have staged a remarkable recovery, with the average house price hitting a record high and all regions showing growth.
The annual rate of house price growth went from 1.7% in November to 2.2% in December, according to ONS data, with the average house price of £234,742 setting a new record.
Jerald Solis, Director of Experience Invest, said: “There is no denying the importance of today’s findings. Just like the FTSE 100, residential real estate has also experienced a surge in investment activity in the aftermath of last year’s general election. For the majority of 2019, house price growth was modest – most investors chose to adopt a “wait and see” approach until they had a better indication of how Brexit could play out. As today’s findings show, December provided the breakthrough the market was hoping for.”
The question now is whether the market can sustain this momentum, especially as the UK continues to quarrel over its future relationship with the EU and the relayed Spring Budget now lies in the untested hands of Rishi Sunak. Still, industry observers believe there are plenty of reasons to be cheerful.
For one, the ONS is noted for being rather modest in its house price estimates when compared to other major indices like Halifax and Nationwide
Mike Scott, Chief Property Analyst at Yopa estate agents, pointed out: “This index tends to lag behind other indicators, since it is based on the completion of sales whose prices were largely agreed several months earlier, and so we anticipate that it will continue to strengthen over the next few months as the renewed market confidence following the decisive election result feeds through into completed sales.”
The fundamentals which fuel house price growth in the UK remain unchanged. Sam Mitchell, CEO at online estate agent Housesimple, said: “Ultimately, an imbalance between supply of properties and demand from buyers is what contributes the most to house price growth. More buyers to the market increases demand so, unless the government introduces any real investment into home building initiatives in the upcoming Spring Budget, house price growth is here to stay.”
The mortgage market is also very tempting for buyers, with a plethora of affordable deals. Jerald Solis, Director of Experience Invest, said: “In this low interest rate environment where demand for residential property is clearly strong, I am confident that house prices will continue to rise over the coming months.”
Every region of the UK is now growing year-on-year, for the first time in nearly two years. London, the bellwether for the property market, has returned to strong growth with a 2.3% annual rate, its best since September 2017.
London’s average price of £482,842 is also a new record, beating the previous high of £479,942 from February 2018.
Marc von Grundherr, director of lettings and sales agent, Benham and Reeves, said: “One strong indication of returning market health has and will always be property performance within the capital. London has languished at the depths of the house price rankings for months on end but has not only shown signs of life in recent months but shifted through the standings considerably, registering strong price growth on both a monthly and annual basis.
“If ever there were a sign that the tides are turning, this is it, and it won’t be long before London starts to lead from the front once again.”
While these promising statistics have stirred a bout of fresh optimism, there are testing times ahead which could sour the property headlines.
Founder and CEO of GetAgent.co.uk, Colby Short, said: “While the initial momentum is promising, much rests on next month’s budget and the government’s plans for the market going forward. While unlikely that any real substance will come of it, the mere suggestion of a further attack on the high-end thresholds of the market, in particular, could be detrimental to overall market activity and top-line price growth.”
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