- Political progress ignites investor confidence
- Shortage of homes for sale underpin market
- Halifax say home prices to continue growing in 2020
Image © Kevin Penhallow, Adobe Stock
Halifax data shows UK house prices posted their strongest monthly increase in nearly 13 years in December with a +1.7% month-on-month, taking the year-on-year increase to 4%.
The December General Election result appears to have boosted market sentiment according to some industry insiders, as the Conservative majority delivers the UK some relative political stability when compared to the recent past.
Marc von Grundherr, Director of Benham and Reeves, says "last month’s election helped to reignite the smouldering embers of an otherwise weary property market. Not only is this boost immediately evident within December’s monthly and annual top line growth, but those of us on the front line also enjoyed an almost immediate uplift in buyer interest and commitment to transactions."
von Grundherr says a large degree of uncertainty remains until a trade deal is officially done between the EU and UK, "but even a mere step in the right direction has been enough to steady the ship considerably and this bodes well for the year ahead."
"While mortgage affordability remains very favourable, we’ve also been promised an economic boost via the first budget in four decades as a non-EU member state, all of which should help build buyer confidence and continue to restimulate house price growth,” adds von Grundherr.
Halifax say they expect uncertainty in the economy to ease somewhat in 2020, which should see transaction volumes increase and further price growth made possible by an improvement in households’ real incomes.
Also underpinning the increase in prices is a familiar supply-and-demand dynamic whereby a housing shortage means buyers are asked to fork out yet more money for their desired property.
“Longer-term issues such as shortage of homes for sale and low levels of house-building will continue to limit supply, while the ongoing challenges faced by prospective buyers in raising to limit supply, while the ongoing challenges faced by prospective buyers in raising deposits will serve to constrain demand,” say Halifax.
Halifax say they expect a modest pace of gains to continue in 2020.
"An unyielding appetite from the nation’s aspirational first-time buyers and a resolute new build sector have ensured that while the rate of price growth has been muted, there has been no meaningful declines. With the worst now hopefully behind us, these two areas of the market should continue to go from strength to strength over the coming year and help drive performance back to previous health,” says the founder and CEO of Stone Real Estate, Michael Stone.