The housing market is expected to be boosted by Boris Johnson’s decisive election victory, but property experts fear that it will not fully recover until Brexit is “well in the past”.
House prices will rise by an average of 2 per cent in 2020, more than double the 0.8 per cent growth rate this year, after the Conservative majority gave homeowners a “window of certainty” that will release pent-up demand for the spring selling season, according to Rightmove.
The property website, which measures the prices of 95 per cent of property coming to market, said prices have been supported by demand outstripping supply. The number of properties put up for sale is down 8 per cent on the previous year. Demand from buyers has remained almost level, with the number of sales agreed so far this year down 3 per cent on 2018 despite the increased level of political uncertainty.
Rightmove expects a modest price rise of 1 per cent in London and the southeast where affordability remains most stretched. The largest increases will be in regions further north where it expects increases between 2 per cent and 4 per cent.
Shares in builders and estate agents rose by more than 10 per cent on Friday after the election result prompted one of sterling’s biggest rallies and raised the prospect of a swift Brexit that could end three years of political paralysis.
Bullish London estate agents hailed the end of a difficult year which has seen house prices and transactions in the capital fall to decade-lows.
Gary Hersham, founder of Beauchamp Estates, an upmarket London estate agent, said he signed a deal to sell a £50 million penthouse in Belgravia to a buyer from Eastern Europe within hours of the election result.
“I feel that the market is going to start surging,” he said.
However, some property professionals warn that domestic buyers and sellers will continue to sit on their hands until a trade deal is agreed with the European Union, delivering further economic certainty.
Henry Pryor, a buying agent, said: “I think celebrations are premature. If you buy something in haste in January I suspect it may be worth up to 5 per cent less next Christmas.”
Savills has forecast a 1 per cent rise in national house prices next year, citing suppressed GDP and wage growth as well as continuing uncertainty over the UK’s future trading relationship with the EU.
The Conservative party manifesto pledged that one million homes would be built in the next five years. It also committed the party to introduce new demand-side policies including a 30 per cent discount on new homes for first-time buyers with the support of contributions made by developers.
Lord Wolfson of Aspley Guise, the chief executive of the retailer Next, yesterday accused successive governments over the past 30 years of introducing policies such as the Conservatives’ Help to Buy equity loan scheme that have “actively prevented people building the type of houses we want to live in, in the places we want to live”.
He told The Mail on Sunday: “The idea you could make houses more affordable by throwing demand at a supply problem, first-year A-level economics tells you that isn’t going to work.”
Lord Wolfson said the government needed to “break the stranglehold” of the planning system to encourage developments to come forward more quickly, estimating that building 100,000 new houses each worth about £300,000 would add more than 1 per cent to GDP.