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UK house prices return to growth amid signs of London recovery
[LONDON] UK house prices rebounded in September amid signs of a pickup in sales of London's most expensive properties.
Prices rose 0.7 per cent this month, matching the average for September since 2011, according to property website Rightmove's housing index. In the capital, there was a 6 per cent rise in sales agreed to for homes costing £750,000 (S$1.3 million) or more compared to the same last month last year, the firm said.
The increase left the average national asking price at £304,061, up from £301,973 the previous month. There was also more positive news in a separate report from Acadata, which showed prices rose 0.1 per cent in August, ending their longest losing streak since the financial crisis.
The surveys provide some rare good news for the UK's housing market, which has been struggling after a three-decade boom. Slower economic growth, government tax changes and the UK's exit from the European Union (EU) have all been blamed for the slowdown, which has been felt most acutely in the capital.
Brexit remains a big question mark hanging over the market. In a meeting of senior government ministers last week, Bank of England (BOE) governor Mark Carney was said to have laid out the worst-case economic scenarios for the UK crashing out without a deal, which included higher mortgage rates and a 35 per cent crash in house prices. The BOE has previously run stress tests showing that banks could cope with such a situation.
The UK's future outside of the EU is also worrying business. The British Chamber of Commerce (BCC) cut its forecasts for the U.K. on Monday predicting growth of 1.1 per cent this year and 1.3 per cent in 2019, down from 1.3 per cent and 1.4 per cent respectively. That implies that, by 2020, the nation will have had its second weakest decade of average annual GDP growth on record, the BCC said.
A separate report from Visa and IHS Markit showed that consumer spending rose 0.4 per cent last month. Expenditure picked up for restaurants, bars and clothing, while the sharpest slowdown was in recreation and culture.
"As the positive effects of the summer heatwave and summer sporting events have faded away, it seems unlikely that spending trends will improve much," said IHS Principal Economist Annabel Fiddes.
"Consumer confidence remains stuck near its post-Brexit vote low, as concerns continue to mount over what kind of Brexit deal the U.K. can achieve when leaving the EU."