A busy station in London

Record employment levels to help boost housing market?

The variety of housing market reports that have appeared since the start of 2019 may give a picture of a market in wait-and-see mode, but new figures on employment levels in the UK offer hope.

There have never been as many people in employment in the UK than at the moment, according to the Office for National Statistics (ONS). It found that, between September and November last year, 32.54 million were in a job while unemployment stands at 1.37 million after a slight rise of 8,000.

On the rise since 2012 low

The proportion of people in work is now 75.8%, a record since records began in 1971. The global financial crisis of 2008 led to a fall in this metric, but since hitting a recent low of 70.3% in early 2012, it has climbed steadily to its current highpoint.

Wages rose by 3.3% while inflation currently sits at 2.1%, a 22-month low driven by falling oil prices that have driven down the price of petrol and air fares.

With the wrangling over Brexit dominating the news agenda, the industry will hope that the greater level of certainty provided by rising employment will translate confident homebuyers. Rightmove reported that their website had 4.5 million visits in the opening fortnight of 2018, 5% up on the same time last year.

Rightmove and Your Move’s latest surveys showed house prices up nationally by just 0.4% and 0.3% respectively, but a regional breakdown gives a fuller picture. House prices in the north-west of England were the strongest in Rightmove’s findings, rising by 2.6% to an average of £193,240. Your Move show that in the regions of the East Midlands, West Midlands as well as the north-west and in Wales, prices rose by above the rate of inflation.

“A broadly static market does allow for the possibility that we will see some improvement in the house price-to-income ratio, and thus in buying capacity over the longer term – assuming of course that wages continue to rise and employment remains at record levels,” say Acadata, who compiled the Your Move report.

“There are some big “ifs” in such a synopsis. Not surprisingly, there are mixed views of what 2019 will bring, and many are caveating their predictions by saying that much depends on how Brexit plays out. Many would concur that agreement on a deal would see a bounce in demand. The range of price predictions by the main analysts for the UK for 2019 runs from minus 1% up to plus 2.5% – with most but not all expecting continued falls in London.

“2020 is generally seen as a year of recovery, although the precise timing will very much depend on the degrees of clarity emerging around the macro-economy. There does now seem to be greater realism in the market, with seller expectations more aligned to buyer offers, and this has allowed some to make beneficial market moves.”

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