Forecast for price boost in the UK as buyers rush to beat Brexit deadline
Annual growth in house prices in England and Wales will reach 3.1% in September and 2.8% in October, the highest level seen since November 2018, according to the latest forecast.
The boost will be due to buyers racing to complete deals before the Brexit deadline of 31 October, according to the forecast from reallymoving.
Overall, it says that average values are set to rise by 1.5% over August, September and October, and be particularly strong in August with a rise of 3.2%, before dipping by 1.4% in September.
As home buyers register for quotes for home move services on the site typically 12 weeks before their purchase completes, reallymoving says it is able to provide an accurate three month property price forecast based on the purchase price agreed.
They also provide both seasonally and mix adjusted data, accounting for the seasonal trends in house prices and variations in the location and types of properties quoted for. Historically, reallymoving’s data has closely tracked the Land Registry’s price paid data, published retrospectively.
Against a backdrop of economic and political uncertainty, the housing market has performed remarkably strongly through the early summer, with a 6% rise in prices in June and a further 3.2% increase forecast in August.
The firm says that this resilience is most likely driven by a significant pent up demand from homeowners who need to move but have held off during recent months and years, who now fear the window up to October could represent their best opportunity.
It also says that while buyers are being selective and seeking bargains, there is also a lack of stock which is helping support values. HMRC have released figures showing that 16.5% fewer property deals were made in June 2019 compared to June 2018, further supporting the idea that a discrepancy between supply and demand of properties is partially responsible for driving the increase in house prices.
It points out that with annual price growth has been in positive territory since June and will remain so for the next three months, with prices in October forecast to be 2.8% higher than twelve months previously. This is the highest rate of annual growth seen for nearly a year, since November 2018.
Underlying conditions in the broader economy continue to underpin the housing market and support year on year price growth, particularly high employment levels, low interest rates and rising household incomes, it adds.
‘The outlook for the property market over the next three months is remarkably positive, considering the current political and economic context,’ said Rob Houghton, chief executive officer of reallymoving.
He believed that any impact on prices of leaving the European Union with no deal at the end of is likely to be mitigated by the urgency of home movers to complete deals in the next three months.
‘While the longer term outlook remains uncertain, we could see a Boris Bounce in the property market if he is true to his word over stamp duty reform and stimulates the market through tax cuts at the top and bottom. Scrapping stamp duty for downsizers could be a cost effective way to stimulate activity throughout the market, freeing up family homes and enabling chains of transactions, at relatively little cost,’ he explained.
‘Annually, house prices in October are on track to be 2.8% higher than they were in October 2018, which is further evidence that home movers have become tired of the wait and see approach and decided to move on with their lives,’ he added.