‘Boris bounce’ will be limited, say forecasters

The Royal Institution of Chartered Surveyors (RICS) and estate agent Knight Frank have both released forecasts for 2020 predicting that house prices will rise by just 2% across the UK, with price stagnation in the capital.

The forecasts come despite talk of renewed market confidence following last week’s  general election result, which has given Boris Johnson a mandate to take Britain out of the EU next month.

According to RICS, any acceleration in house-price growth in 2020 is likely to be minimal, despite rising expectations among surveyors over the past couple of months.

While a temporary recovery in confidence is possible, RICS says there are few signs that the current stagnant market, which is “plagued by a shortage of stock”, would change substantially, meaning “the likelihood of a material pick-up in activity during 2020 seems unlikely”.

It predicts that UK average house prices will rise by around 2% annually by the end of 2020. London is likely to get some relief from several years of falling prices. Its “central projection is for London and South-east house prices to hold steady in 2020.”

Knight Frank also expects house prices to grow by 2% in 2020, after 1% growth this year, but with no growth at all in London. However, the firm said it expects  house-price inflation to accelerate from 2021 onwards, with national growth of 15% in total over the next five years.

Tarrant Parsons, a RICS economist, said that with ratification of the Withdrawal Agreement likely in the coming weeks. “this could see some confidence returning, at least for a brief spell, meaning activity may see some uplift”.

However she added: “Challenges around affordability and low stock levels will continue to drag on the market, and Brexit uncertainty could resurface as the next deadline draws closer. As such, we expect house prices to rise by just 2% next year, with the outlook for overall sales volumes broadly flat.”

Tom Bill, head of London residential research at Knight Frank, said: “Slightly stronger growth is expected in the south-east and east of England supported by a more positive outlook for economic and employment growth over the next five years. Once the Brexit deal is completed, we forecast rising momentum across all markets, with price growth reflecting this from 2021 onwards.”

The predictions come as other market commentators hope for much more vigorous price growth. Lucy Pendleton, founder director of estate agent James Pendleton, said the market had reacted immediately to the election result, but that the statistics were yet to catch up.

She said: “Not yet visible is the Boris bounce in house prices we all sense is already well underway. New enquiries for property picked up the day of the election result and foreign buyers are matching their domestic counterparts for renewed enthusiasm.”