UK house price growth hits 21-year high, weaker 2021 likely – RICS

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The boom in Britain’s housing market carried on into October as a gauge of house price growth struck a new 21-year high, but next year looks set to be much quieter, a survey showed on Thursday.

The Royal Institution of Chartered Surveyors (RICS) said its house price index rose unexpectedly to +68 from +62 in September, the highest reading since September 1999.

A Reuters poll of economists had pointed to a reading of +55.

The survey, based on responses of surveyors across the United Kingdom, showed little sign of a let-up in a surge in housing market activity since the coronavirus lockdown earlier this year.

The bounce-back reflects pent-up demand from the lockdown, people seeking bigger homes and a temporary cut to property sales tax by finance minister Rishi Sunak.

“However, there is understandably more caution about activity looking beyond the first quarter of 2021,” said RICS chief economist Simon Rubinsohn.

“Aside from the withdrawal of government incentives, the market may also find the more challenging employment picture a significant obstacle even with interest rates set to remain close to zero for some time to come.”

Around 782,000 people on payrolls have lost their job since the start of the pandemic, according to tax data published earlier this week.

Although there is now hope that an effective vaccine against COVID-19 will arrive soon, the economy is likely to struggle through the next few months.

RICS’ gauge of housing sales expectations for the next 12 months remained firmly in negative territory in October, despite a slight improvement from September’s reading.

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