House prices in the United Kingdom rose at the fastest pace in nearly three years last month, according to a closely watched survey that adds to signs of a rebound in consumer sentiment since December’s election lifted some Brexit uncertainty.
The Royal Institution of Chartered Surveyors’ (RICS) monthly house price index surged by 17 points in January after falling two points in December, its highest reading since May 2017, and higher than all the forecasts of economists in a Reuters news agency poll.
The growth was driven by a turnaround in London and southeast England, which had previously under-performed due to higher property purchase taxes and the prospect of the UK leaving the European Union in a disorderly way.
For the first time since February 2016, a majority of surveyors said prices in London were going up.
“It remains to be seen how long this newfound market momentum is sustained for and political uncertainty may resurface towards the end of the year. But at this point in time contributors are optimistic,” RICS chief economist Simon Rubinsohn said.
More widespread price rises were matched by an increase in the number of properties being listed for sale, which rose at the fastest rate since August 2013.
For the year ahead, there was the broadest expectation of price rises since January 2016.
The UK left the European Union on January 31 and is now in a transition period under which their terms of trade will not change until the end of 2020, after which trade with the EU will face border checks and potentially tariffs as well.
But the end of uncertainty that hung over when the UK would leave the EU and the risk of a sharp leftward shift in government policy under defeated opposition Labour Party leader Jeremy Corbyn has lifted sentiment since the December 12 election.
Mortgage lender Halifax reported a 4.1 percent annual rise in house prices in January, the biggest increase since February 2018, and the Bank of England said lenders approved the newest mortgages since July 2017.
At the end of January, the Bank of England kept interest rates steady because it saw signs of a pick-up in growth.