Inflation-adjusted house prices were up by 2.62% y-o-y in Q3 2020
The UK’s housing market continues to improve surprisingly. Real house prices rose by 2.62% during the year to Q2 2020, in contrast to the previous year’s 1.44% decline. This is the market's best performance since Q4 2016. Quarter-on-quarter, real house prices increased 1.54% during the latest quarter.
The South West was the best performing region during the year to Q3 2020, with real house prices rising by 4.67%, followed by Outer Metropolitan Area (4.11%), Outer South East (3.91%), and Yorkshire and Humberside (3.74%). London real house prices increased 3.52%.
Demand is gradually rising
The pandemic seems to have had the strange effect of stimulating UK housing market activity.
In September 2020, residential transactions were up by 20.7% from the previous month and by 2.4% from a year earlier at 101,920, according to the HM Revenue & Customs.
Demand was weak before the pandemic, falling by 1.2% in 2019 and 2.3% in 2018, due to volatile political and economic environment surrounding the Brexit deal.
Rents, rental yields: London yields are poor, at around 2.6%
London apartment costs are very expensive, at €18,057 per sq.m.
| UK: typical city centre apartment buying price, monthly rent (120 sq. m) | |||
| Buying price | Rate per month | Yield | |
| London (Prime Central | $2,166,840 | $4,715 | 2.61% |
Recent news. The UK's GDP is expected to shrink by an amazing 9.8% for full year of 2020, according to IMF forecasts.
A GDP expansion of 15.5% quarter-on-quarter in Q3 2020 partially offset a record contraction of 19.8% in Q2, according to the Office for National Statistics (ONS). However, with England again under a month-long partial lockdown until at least December 2 amidst a resurgence of COVID-19 cases, the economic recovery is projected to lose steam in Q4.
In November 2020, the Bank of England (BoE) kept its key rate unchanged at its record low of 0.1% after cutting it twice during the pandemic from its initial 0.75%.
The UK officially left the European Union (EU) on January 31, 2020, after a referendum vote four years earlier. Current trading arrangements with the EU remain in place until the end of 2020.
