UK Home Prices Jump in August

The UK housing market rally intensified in August, a survey said, with prices hitting a four-year high as buyers seek garden properties, and the survey also sent a warning signal that the recovery could lose momentum.

The Royal Institute of Chartered Surveyors’ monthly house price index rose to +44 in August from +13 in July, reaching the highest level since February 2016. A Reuters poll of economists had forecast a reading of +25.

Prices have increased across the country with the exception of London, where they have remained somewhat stable over the past two months.

The survey is in line with other indications that a limited boom is underway in the housing market, one of the few parts of the economy that has recovered from the pandemic, receiving support in part from an emergency tax cut on buyers.

The Royal Institute said that demand has accelerated strongly, supported by a shift towards real estate with gardens after the general isolation measures aimed at combating Covid-19 but there were some pessimistic indications.

The survey’s measure of sales in the next 12 months deteriorated further in August, as it was negatively affected by worries about the economy.

And last week, Bank of England Governor Andrew Bailey said it was too early to say whether the housing market recovery was more than a release of pent-up demand following lockdown measures, backed by a temporary home tax cut.