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January sees a boom in UK house prices

By Philip Smith

Last month's surge could be down to a release of pent-up demand, warns Halifax

House prices in the UK, one of the major benchmarks of economic activity, surged at the fastest rate in two years during January.

According to the Halifax, which compiles a monthly index, UK house prices rose 4.1 per cent year-on-year last month, the biggest annual rise since February 2018. The average property costs £240,054.

Is this down to post-EU euphoria, or simply a deluge of pent-up demand? “It’s too early to say if a corner has been turned. The recent positive figures may actually represent activity that would ordinarily have been expected to take place last year but was delayed by economic uncertainty,” said the Halifax Bank’s MD, Russell Galley.

Even so, he said, “A number of important market indicators continue to show signs of improvement. We have seen a pick-up in transactions with more buyer and seller activity consistent with a reduction in uncertainty in the UK economy.”

The price rise would have been expected; the Bank of England reported a rise in the number of mortgage approvals in December and, as reported here yesterday, while the number of new homes planned in the UK is rising, it’s still below the government’s target. It’s a simple case of supply and demand.

On the back of that, experts are anticipating strong price growth over the rest of the year, supported by both low unemployment and mortgage interest rates. The EY Item Club, an economic forecasting group, is predicting price gains over 2020 of at least 2.8 per cent, up from 2.2 per cent last month.

FURTHER READING: New homes planned in UK highest since 2007

FURTHER READING: Quarter of landlords planning to quit UK market this year

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