U.K. House Prices Jump After Election Paves Way for Brexit

(Bloomberg) --

U.K. house prices jumped the most in more than a year in January, according to Nationwide Building Society, reinforcing perceptions that the economy is gradually recovering after Boris Johnson’s election victory.

Values rose 1.9% from a year earlier, the most since November 2018, the mortgage lender said Wednesday, a day before the Bank of England’s interest-rate decision. From December, prices increased 0.5%.

The U.K. housing market is showing signs of life after Johnson’s decisive win in December brought about a lull in Britain’s Brexit drama, clearing the way for the nation to leave the European Union this week. The question is whether the bump can be sustained as the U.K. aims to reach a trade pact with the EU by the end of this year, a goal many consider unrealistic.

“Looking ahead, economic developments will remain the key driver of housing market trends and house prices,” said Robert Gardner, Nationwide’s chief economist. “We expect the economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat over the next 12 months.”

What Bloomberg’s Economists Say

“Don’t be fooled by the bounce in the Nationwide house price index. While the decisive general election result in December is unleashing some pent-up demand from home-buyers, it will also encourage more homeowners to put their houses up for sale.”

-- Niraj Shah, economist. Read the U.K. REACT

The release is one of the last economic reports before the BOE’s decision. Bets on a rate cut have declined steadily this week, and fell further after the report to 44%, compared with 60% on Monday.

To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Alaa Shahine, Brian Swint

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