Property prices leapt at their fastest monthly rate in a year in December as the Conservative election victory helped “reignite” UK price growth, new figures suggest.
The latest monthly house price index from the bank Halifax shows prices rose 1.7% month-on-month in December, up from 1% in November.
It came as prime minister Boris Johnson’s decisive election victory in mid-December broke the Westminster deadlock over government efforts to pass key Brexit legislation, providing slight relief from political uncertainty.
The figures showed fairly rapid growth of 4% over the whole of 2019 despite political upheaval and weak UK economic growth, at the top of Halifax’s predicted range of between 2% and 4%.
The average price of a UK home was £238,963 in December, according to the report, which is closely watched as a sign of the strength of the UK property market and wider economy.
Property prices were also 1% higher in the latest quarter, October to December, than the previous three months from July to September.
Marc von Grundherr, director of London estate agent Benham and Reeves, said estate agents had seen an “almost immediate uplift’ in buyers’ interest and commitment after the election on 12 December.
“Whether or not you agreed with the outcome, last month’s election helped to reignite the smouldering embers of an otherwise weary property market,” he said.
Russell Galley, managing director of Halifax, said: “Looking ahead, we 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.”
But he said Halifax only expected a “modest pace” of gains to continue into 2020, with buyers’ struggle to afford the high cost of property in many areas likely to limit growth.
Separate analysis published by Nationwide on Tuesday showed affordability worsening over the past decade in the UK.
It found average prices rose by 33% in the 2010s, far weaker than the 117% surge in the 2000s but still much higher than income growth over the decade of just 20%.
“Longer-term issues such as the 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 deposits will serve to constrain demand,” Galley added.
Von Grundherr acknowledged continued uncertainty until a trade deal is struck between Britain and the EU, but struck a more bullish tone on prices.
“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,” he said.