Tory Election Win Won’t Resurrect Housing Market Boom, RICS Says

(Bloomberg) -- The U.K.’s property market won’t see a flurry of activity next year even in the wake of the Conservatives’ decisive election win, the Royal Institution of Chartered Surveyors said Thursday.

House prices will likely rise just 2% in 2020, RICS said, echoing a similar prediction from property website-operator Rightmove. Prime Minister Boris Johnson’s government must prioritize housing policy to “inject activity” into the market, after lower sales volumes across most regions in the past year.

“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,” said Tarrant Parsons, RICS economist. “Momentum across the U.K. housing market has remained relatively subdued, with new buyer demand showing little impetus going into the new year.”

Uncertainty surrounding the U.K.’s exit from the European Union has been a drag on prices and activity in recent years. While Johnson’s election victory fueled immediate optimism for a smooth departure, he has since announced plans to prevent Britain extending its transition period past the end of 2020, again raising the prospect of a disorderly transition.

A shortage of homes, meanwhile, has for years kept property ownership out of reach for many Britons, particularly in the capital, where values are double the national average. There are tentative signs that growth is stabilizing in London and house-price inflation could move out of negative territory there in the next six months, RICS said.

While the Conservative manifesto re-stated the government target of building 300,000 new homes per year, there’s little evidence that progress is being made, the RICS report showed, and prospective homebuyers will probably continue to be faced with limited choices.

Figures from the Office for National Statistics published Wednesday showed that house prices grew just 0.7% in October, the lowest annual rate in more than seven years.

To contact the reporter on this story: Jill Ward in London at jward98@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Brian Swint, David Goodman

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