By Russell Quirk

What I am about to write will not be popular in some quarters. But the following is a mix of opinion and data that will set out the direction of house prices for the coming year or so. 

Spoiler alert – the direction of UK house prices is upwards and this is why certain market commentators will disagree with me. These are the same pier-end Tarot card types who’ve been predicting a crash since around the time the decision was taken by Parliament to hold a referendum on leaving the EU.

Through the prospect of Brexit, Brexit itself, a potential ‘no deal’ Brexit, Covid, lockdowns, the Russian invasion of Ukraine, spiralling energy prices, rampant inflation, higher interest rates, economic uncertainty, political clownery, a general election and the first change in government since 2010 – a self-serving handful of pretend housing experts have predicted a decline in house prices.

Except, it still hasn’t happened. 

Markets are driven by positive sentiment. And in the case of housing, by cheap money. Neither of these things have been evident for a while, relatively speaking, and yet property values have continued to climb. Some have underestimated the resilience of home buyers and sellers and the landscape on which they exist. 

If the UK housing market were a character it would be Superman, but without any hint of kryptonite. 

So prices have risen despite the rocks that geopolitics, viral biology and a Westminster clownfest have thrown at it. 

For a number of months many of us have been calling for the Bank of England to cut borrowing rates from a 16-year high. Their 2% inflation target was reached in May, having come close in April, as supply-led inflation subsided because wholesale energy cost pressures have retreated. 

The supposedly non-political governor Andrew Bailey and his MPC members seemed hesitant to cut the rate from 5.25% until just 28 days after Keir Starmer strolled into Downing Street (a complete coincidence of timing, I’m sure). This, the first reduction since March 2020 and the rate now stands at 5%. 

Fact: House prices are 23% higher now than since that last interest rate cut.

Logic would rather dictate that if weights are taken out of the rucksack you’re running with, you’ll run faster. And hence it seems obvious to me that if house prices rose 23% as interest rates reached a decade and a half high, as rates begin to fall, prices will rise further. 

This isn’t just a question of cheaper mortgages making purchases more affordable for buyers, albeit that is a huge factor in what is about to happen, especially as wage growth continues at nearly 6% per annum. Inevitably disposable income and affordability are now both improving. 

No, this is also a question of sentiment itself, and the enthusiasm with which home-buyers, consumers and businesses will approach spending now that the direction of travel for the cost of money is downwards. It’s a question of confidence. 

ProperPR data shows that home values almost always increase after an election. This has happened after every UK general election since 1983, with the exception of 1992 and 2010. Values increase by an average of 5.4% in the year following each one.

I’ve made bets on house price growth in the past and been right every time and in contrast to the glass-half-empty mob. I won’t fall into the unnecessary trap of predicting an arbitrary, specific percentage point increase but I will predict this with some certainty – UK house prices will definitely be higher in the year ahead, no question. Transactions too, and which are actually more important to you than prices.

The usual suspects will disagree in the comments and on social media in response to this article. But they will be wrong once again and should really revert to reading tea leaves at the seaside because those sorts of predictions will have more credibility than their housing market efforts. 

Me, on the other hand? I continue to be the property industry’s very own Paul the Octopus.