UK RICS house price balance holds near 21-year high

LONDON (Reuters) - British property surveyors reported that house prices increased at close to their fastest rate in more than 20 years last month, extending a post-lockdown boom, but they expect sales to fall when a temporary tax break expires in March 2021.

FILE PHOTO: Painted property fronts are seen in a residential street in London, Britain, January 29, 2016. REUTERS/Toby Melville

The Royal Institution of Chartered Surveyors (RICS) said its monthly house price balance fell to +66 from a downwardly revised +67 in October, which was its highest reading since November 1999.

The balance represents the difference between the percentage of surveyors reporting a rise in house prices and the percentage seeing a fall over the past three months.

The figures broadly chime with house price data from mortgage lender Halifax on Monday, which showed the biggest increase in house prices since 2004 during the five months since Britain’s nationwide lockdown ended in June.

Bank of England data showed the highest number of mortgage approvals since 2007 in October, as buyers sought to benefit from a temporary exemption in property purchase taxes that was designed to jump-start sales after they collapsed in April.

Surveyors expect sales volumes to fall next year when the tax break ends.

“A scaling back in direct government support for the market is part of the reason for this but it is being compounded by expectations of material rise in unemployment as redundancy programmes begin to take effect,” RICS chief economist Simon Rubinsohn said.

RICS’s new buyer enquiries balance has already dropped to +27 in November from a peak of +75 in July.

The fall in sales volumes is expected to lead to slower price growth - with a balance of +20 for the next 12 months - but not to outright price falls, Rubinsohn said.

The figures continued to show a big regional split, echoing other reports of demand shifting away from London and towards larger homes elsewhere that are better suited to home-working.

London’s price balance stood at +9, compared with +76 for the rest of Britain.

Reporting by David Milliken, editing by Andy Bruce