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Housing supply improves as the market starts to slow

Sales activity remains strong across the housing sector, but there are signs that the market is starting to slow to more moderate levels as more properties come on to the market.

With the housing market booming, some vendors previously felt that they might run the risk of selling too quickly before finding somewhere to buy, but these concerns have now eased slightly and more are willing to come to the market. This is according to Ian Marriott, head of Savills Nottingham.

His comments come following the release of the May 2022 OnTheMarket (OTM) Property Sentiment Index this morning.

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The report found that while the high levels of buyer and seller confidence in April are consistent with the previous two months, there is also strong evidence emerging of a more stable housing market.

“The frenzy of the past two years has settled into a more manageable, steady environment, a ‘new normal’ or elevated version of the pre-pandemic market,” said Jason Tebb, chief executive officer of OTM, “There are several headwinds, including the rising cost-of-living and the potential for further interest rate rises from the Bank of England; however, these factors have yet to impact sentiment.”

OTM reports that the number of properties newly listed for sale is slowly increasing and supply-demand economics suggest that if this continues, price growth will moderate.

Tebb commented: “If there’s more choice of properties for sale and buyer numbers remain consistent, or even start to drop off, there could be a levelling off in activity and prices. However, the fundamental lack of stock at the present moment means that values will hold at a certain level.”

While there may be further challenges to come, for now OTM’s data shows strong confidence from both buyers and sellers, which is continuing to fuel the UK housing market.

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Tebb continued: “There are many reasons why people need to move and there are plenty looking to do so. This is particularly true in the regions outside the major conurbations as they look their best right now with spring leaves on the trees – one of the reasons why spring/summertime is a natural time to sell. The challenges of the past two years have ingrained a sense of positivity in the housing market which shows no signs of slowing and as such continues to thrive as serious property seekers get on with the business of moving.”

OTM data reveals that in April, 82% of sellers were confident that they could complete a sale within three months, which is the same percentage as in March and February 2022, with some regions even reporting an uptick in confidence.

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Sellers confident that they would sell their home within the next three months rose to 82% in April in the East Midlands, compared with 75% in March.

Seller confidence also rose to 83% in the East of England, up from 81% the previous month. London saw a slight drop-off, with the percentage of sellers confident they’d sell their property in the next 3 months falling from 86% in March to 82% in April, bringing it more in line with other parts of the country.

“Strong demand from serious buyers remains, with our data showing that in April, 63% of properties in the UK were SSTC within 30 days of first being advertised for sale,” Tebb said. “Again, behind this national average there are differences which reflect the diversity of regional markets; for example, 50% of properties were SSTC within 30 days of first being listed in London, compared with 79% of newly listed properties in Scotland.”

Source: Property Industry Eye

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UK housing market: what trends are we seeing right now?

Keeping abreast of the latest changes and trends in the UK housing market is the best way for buyers and investors to make savvy purchases.

From house prices to interest rates to regulation changes, there is a constant sea of new information when it comes to the property market.

For buyers and investors, as well as sellers and tenants, predicting the next set of trends and figures isn’t always possible, but following the latest data is a good starting point.

Most recently, the Nationwide house price index revealed strong but stabilising house price growth. Housing affordability, alongside cost of living concerns, are influencing not only buying but renting trends, too. How else is the market adapting?

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House prices and a buoyant UK housing market

One of the most notable trends currently being seen across the UK housing market is the continuing uphill climb of prices. Last week, Nationwide reported impressive 12.1% annual growth, bringing the average selling price to £267,620.

While this is down on last month’s figure – which was a 14.3% increase over the 12 months to March – commentators are surprised at how buoyant the sector is in the face of affordability issues.

Robert Gardner, Nationwide’s chief economist, said: “Housing market activity has remained solid with mortgage approvals continuing to run above pre-Covid levels.

“Demand is being supported by robust labour market conditions, where employment growth has remained strong and the unemployment rate has fallen back to pre-pandemic lows. With the stock of homes on the market still low, this has translated into continued upward pressure on house prices.”

He added: “Nevertheless, it is surprising that conditions have remained so buoyant, given mounting pressure on household budgets which has severely dented consumer confidence.

“Indeed, consumers’ expectations of their own personal finances over the next twelve months has dropped to levels last seen during the depths of the global financial crisis more than a decade ago.”

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Return to city centres

Another notable trend that might be of interest to homebuyers and property investors is the slowing down of the “race for space” seen as a result of the pandemic.

A recent survey by Nationwide found that the proportion of people looking to escape the hustle and bustle of urban life had “declined substantially”. It found that around 12% of movers were currently prioritising this in their move, including seeking more outdoor space, compared to 15% last year.

According to Emma Cox, managing director of real estate at Shawbrook Bank, poor supply levels are “insulating sellers” and this is set to continue, particularly in traditional UK housing market hotspots.

She added: “The return to city centres after a two-year hiatus and the demand for more face to face interactions again could reignite the UK’s love affair with cities such as London.”

New research from Rightmove backs up this theory, which has showed a renewed interest in both cities and commuter towns, as well as a change in the property types prospective buyers are seeking.

Tim Bannister, Rightmove’s property data expert, said: “In the initial stages of the pandemic, houses stole the show, as people looked for as much room as possible. As restrictions have eased, being closer to city amenities has become more of a priority.”

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Short-term lets remain a popular option

According to Emma Cox, short-term rentals and holiday homes are another growing trend that doesn’t look set to fizzle out any time soon; as such, property investors and prospective buyers can consider this avenue with more confidence than ever before.

Cox said: “The staycation and second home boom in seaside towns also remains steadfast, making quaint British towns a top priority for buyers too.

“The acid test for the market will be the run up to summer. Traditionally a hive of activity, sellers will be hoping for current transaction levels and price growth to prevail.

“Current expectations are that house prices will be shielded from current pressures for the remainder of 2022, with reality perhaps starting to bite in 2023 if current market conditions persist.”

One of the drivers behind the general shift towards staycations is the environmental aspect, which is becoming increasingly important to growing numbers of people looking to live more eco-friendly lifestyles.

A recent report by Mintel on domestic tourism revealed that more than half of UK adults planned to take a domestic holiday in the 12 months that followed August 2021.

Interestingly, 18% of those who plan to take more holidays in the UK want to limit their carbon footprint. Additionally, Mintel’s report on family holidays found that 14% of parents see a carbon reduction as one of their top five factors for choosing their next family holiday.

Further adding to the environmental focus, the survey showed that 28% of UK adults said they prioritise the environment more now than they did before the COVID-19 pandemic.

By Eleanor Harvey

Source: Buy Association

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Rents rise 1% in most regions in April, says index

Rents in England have continued to increase in April as the market remains buoyant, according to the latest Goodlord Rental Index.

The average cost of rent for a property in England rose from £1,006 to £1,012 in April, an increase of 0.5%.

The index found that all regions saw an increase in prices of up to 1%, with the exception of Northern regions.

The North East saw a larger increase in the cost of rent, with prices up by 2.34%. The North West, however, was the only region to see a drop in the average, with a 1.6% decrease.

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Goodlord’s index also showed that there was another rise in tenant incomes, with the month setting a new record for take-home pay.

As prices continue to creep up, so do salaries, according to Goodlord, reflecting the pressure on employers in a competitive labour market.

In April, the average annual salary of a tenant living in England rose from £29,549 to £30,044, a 1.7% rise, representing another index record.

Renters in London are earning the most, taking home on average £44,920.38, compared to the North West who are the lowest earners, taking home an average of £24,403.69.

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On a yearly basis, renters are now earning 16% more than they did at the same time in 2021.

However, voids rose slightly during the months, as the pace of deals cooled in some regions. The average void period for the country in April increased by three days, up from 16 days to 19.

The biggest shift was seen in the North West, where a rise of 37% was recorded. This was followed by Greater London, which saw voids increase from 11 days to 14, a 27% rise. The index showed that London still has the lowest void periods in the country.

Goodlord chief operating officer Tom Mundy says: “The rental market continues to move apace. Rents are at the top end of what we’d expect for this time of year, but tenant salaries are keeping pace with this rise and continue to break records. And whilst voids have lengthened compared to March, all the signs point to a very buoyant market with a high demand for available housing stock.”

By Becky Bellamy

Source: Mortgage Finance Gazette

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Nationwide reveals April house price index

Annual house price growth has slowed down slightly in April, but has remained in double digits for the 11th time in the past 12 months, the latest Nationwide House Price Index has today revealed.

UK house prices grew by 12.1% year-on-year in April, down from 14.3% in March. Prices rose by 0.3% month-on-month, after taking account of seasonal effects – the ninth consecutive monthly increase, though this is the smallest monthly gain since September last year.

Robert Gardner, Nationwide’s chief economist, pointed out that housing market activity has remained solid with mortgage approvals continuing to run above pre-COVID levels.

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“Demand is being supported by robust labour market conditions, where employment growth has remained strong, and the unemployment rate has fallen back to pre-pandemic lows. With the stock of homes on the market still low, this has translated into continued upward pressure on house prices,” he said.

However, Gardner was surprised that conditions have remained so buoyant, given mounting pressure on household budgets, which has severely dented consumer confidence.

“Consumers’ expectations of their own personal finances over the next 12 months have dropped to levels last seen during the depths of the global financial crisis more than a decade ago. Moreover, housing affordability has deteriorated because house price growth has been outstripping income growth by a wide margin over the past two years, while more recently, borrowing costs have increased,” the economist said.

“Risks to growth have been mounting for some time, so it’s unsurprising to see prices moderating slightly in this latest data,” Nicky Stevenson, managing director at national estate agent group Fine & Country, said. “Whether this is a harbinger of things to come remains unclear and experts continue to debate whether the fundamentals of the market can continue to support double digit growth for much longer.”

According to Gardner, however, it is expected that the housing market would continue to slow down in the coming quarters.

“The squeeze on household incomes is set to intensify with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high. Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates,” he said.

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Andrew Montlake agreed that the slowing in growth seen in April is likely to continue throughout 2022.

“We are now seeing some real signs of a storm blowing in. Inflation and the cost-of-living crisis, together with the continuing war in Ukraine, are making buyers more cautious and are creating a nervousness among lenders that may see them cut their cloth accordingly in the second half of this year,” he said.

“The rate of price growth is likely to continue to fall during 2022 but the drastic lack of supply could prevent prices from falling,” Montlake added.

“A slowdown in the rate of price growth was always on the cards given the huge spike in the cost-of-living and higher mortgage rates,” Dominik Lipnicki said. “The lack of stock will help support prices, even if the rate of growth continues to slow.”

Tomer Aboody, director of property lender MT Finance, said that with interest rates going up, buyers are rushing to secure a mortgage now before further increases are implemented.

“As rates rise and inflation increases, a lack of confidence is likely to start to filter through, leading to a slow calming of the market in coming months,” he added.

Meanwhile, a survey of around 3,000 consumers across the UK, conducted online by Censuswide on behalf of Nationwide, seems to explain why market activity remained buoyant despite rising costs.

Almost four in 10 (38%) respondents stated that they were either in the process of moving or considering a move.

This proportion was particularly high in London, where almost half said they were moving or considering a move. Even in Wales, where the share was lowest, more than 25% were either moving or considering a move. This is very high, according to Gardner, given that only around 5% of the housing stock turns over in a typical year in the UK.

The survey also showed that the proportion of people considering a move was highest among private renters (45%), those living with family (44%), those owning a home with a mortgage (42%), and those owning their property outright (30%).

“Interestingly, despite mounting pressure on household finances, the share of people moving or considering a move was higher than during the height of the pandemic in April last year across all tenure types, as shown below,” Gardner observed.

The survey results also suggest that shifts in housing preferences as a result of the pandemic are continuing to support housing market activity, though to less of an extent than at this time last year.

Around a quarter (24%) of those moving or considering a move said that they needed to move to a larger property, and for most age groups, a majority are still looking to move to less urban environments.

However, the proportion of those citing a desire to get away from city life, or gain access to a garden or outside space has declined substantially to 12% and 15% respectively, down from 25% and 28% in April 2021.

For most movers and potential movers, the majority of those surveyed are looking to trade up – the exception being among those aged 55 and above, where nearly 40% are looking to move to a smaller property compared to just 7% looking to move to a larger property.

Financial reasons are cited as a factor motivating a move by a sizeable minority, with 17% of those moving or considering a move saying they were doing so at least in part to reduce spending on housing, either by moving to a different area and/or by moving to a smaller property.

Iain McKenzie, chief executive at The Guild of Property Professionals, stated that the demand to move, combined with solid mortgage approval numbers, will help prop up house prices.

“Across all ages, movers are still looking for properties away from urban environments, and the amount of people working from home will keep prices higher in commuter areas,” McKenzie said.

By Rommel Lontayao

Source: Mortgage Introducer

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Prime London property prices are trending up

While prime London property prices have remained largely flat on a year-on-year basis, many are starting to return to the capital’s top tier, with some postcodes seeing average sale prices climb by as much as 114%.

This was revealed in research by debt advisory specialists Henry Dannell, which analysed sold price data for prime London property sales above £2 million across 51 of the capital’s most prestigious property postcodes.

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“There’s certainly a renewed sense of confidence across prime central London and early indicators suggest that 2022 should be a very positive year for this segment of the market, with an uplift in foreign buyer demand likely to be the most significant influence behind an anticipated revival in both transaction levels and sold prices,” Geoff Garrett, director of Henry Dannell, said.

“We’ve already seen the foundations of this market revival being laid in 2021, with the majority of postcodes registering an increase in sold price values, some doing so quite significantly,” he added.

Henry Dannell’s research shows that London’s high-end homes commanded an average selling price of £3,229,509 in 2021, down when compared to 2020, albeit by a marginal -0.8%.

With this segment of the London market expected to make a strong return in 2022, the analysis from Henry Dannell suggests a number of prime postcodes have jumped the gun, having enjoyed significant house price increases over the last year.

This is most evident in Camden’s WC1A postcode, where the average sold price for over £2 million-properties increased by 114% between 2020 and 2021. The borough’s southern tip is also home to the second largest increase, with the WC1N postcode seeing the average sold price increase by 55% on an annual basis.

Westminster’s W1W (35%) and SW1H (34%) postcodes have enjoyed the next largest uplift in prime London sold prices, with the SW5 postcode in Kensington and Chelsea (28%) and the SW1P (26%) postcode, again in Westminster, also seeing increases of over 25%.

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A further 25 prime London postcodes have seen positive movement where the average sold price for homes at £2 million or above is concerned.

However, the same can’t be said for the entirety of the capital’s top tier market, with some postcodes seeing a reduction in average sale prices of up to -71%.

Henry Dannell said a reduction in demand from wealthy foreign homebuyers has caused the prime London market to struggle in recent years, initially due to a prolonged period of political uncertainty spurred by Brexit and, more recently, the pandemic-imposed travel restrictions.

“Unfortunately, some areas have yet to recover and sharp declines at the other end of the market have wiped a considerable amount of value from the average home,” Garrett said.

“Of course, this isn’t unusual in a low volume, high-value market like prime central London, where homebuyer preferences are very much influenced by the current flavour of the month. This shift in the popularity of a given neighbourhood can result in a drastic shift in property sold prices across that particular cluster of neighbouring postcodes.”

By Rommel Lontayao

Source: Mortgage Introducer

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How to invest in buy-to-let: the in-demand cities unlocked with a budget of £100,000

Soaring rents have enticed property investors back to the buy-to-let market to take advantage of the demand.

Asking rents outside London were up 11pc year-on-year in the first three months of 2022, according to property website Rightmove. In the capital, they jumped by 14.3pc – the largest annual increase recorded in any region since its records began.

A dire shortage of homes to let means rental bidding wars are commonplace and a record number of landlords are achieving over asking price.

Buyers must still contend with rising house prices, but a budget of £100,000 is enough to invest in some of the most in-demand cities in the UK.

We previously looked at where landlords could invest with budgets of £25,000 and £50,000, which largely ranged across Wales and the north east of England.

In the three locations below, an initial investment of £100,000 is enough to buy a property with the potential to earn more than £10,000 each year, according to research by estate agency Hamptons.

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Bristol

Bristol ranked as the best city for landlords to invest in for 2022, according to Aldermore bank.

More than a quarter of the South West city’s population lives in rental accommodation, and a shortage of properties to let has pushed rents skyward. The average rental yield is 6.5pc.

A £100,000 budget would cover a 25pc deposit and stamp duty on the average flat and terraced house in the city– costing £70,180 and £96,870 respectively – with cash to spare.

A flat in Bristol brings in roughly £11,092 of rental income a year, once mortgage payments and a 10pc provision for maintenance costs have been deducted, according to Hamptons. Annual income rises to more than £14,826 for a terraced house, among the highest for this type of property in the country.

An initial lump sum of £100,000 would be enough to cover the deposit on a semi-detached house in the city, at an average of £96,550, but stamp duty would push the total investment to £117,450. Landlords who can stretch their budget to this size could expect annual rental income after expenses of £17,681.

Manchester

Manchester has enjoyed a similar post-pandemic rental boom to Bristol. Tenants have flooded back to the city and snapped up any available lets, with new-build flats proving particularly popular, according to Rhiannon Durston, of agency Reside.

She said: “The city has become increasingly popular with investors as a result. Landlords are targeting lots of different price points, ranging from those looking to invest their savings in just one property, to those buying multiple.”

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The average rental yield in the city is 6.4pc, and a typical flat costs £175,380. Landlords will need to make an initial investment of £50,120 to cover the deposit and tax bill, and can expect profit after expenses of £7,885 a year.

Investing in terraced houses and semi-detached homes in the city is also possible with a £100,000 budget. An initial stake of £55,520 for a terraced home and £74,390 for a semi are needed to cover the deposit and tax bill on each of these property types.

Landlords can make profits after expenses of £8,694 from a terraced house and £11,496 from a semi-detached house, according to Hamptons.

Ms Durston added: “Many of the new build sites are now sold out. One-bedroom rentals fly out and three-bedroom homes are very popular too, but there are few of these available on the market.

“Splitting bills three ways between tenants makes the let more affordable, which is why they are in such high demand.”

Winchester

Higher property prices in the sought-after hotspot of Winchester limits landlords with a £100,000 budget to investing only in flats. They require £68,550 to cover the average deposit and stamp duty.

Buyer appetite for houses with gardens has surged since the pandemic, meaning landlords will be up against stiff competition for bigger properties. The average terraced house in the area requires an initial investment of £115,080.

However, investors who can afford to tap into the Winchester market will benefit from strong tenant demand.

Bill Jarvis, of estate agency Winkworth, said: “Landlords are now in a position to choose who they let their property to because demand is so high, whereas they couldn’t before.

“We frequently see tenants offering on a property without even viewing it.”

The average rental income from a flat in Winchester is £10,332 a year, after costs, according to Hamptons. If landlords can stretch their budget to a terraced or semi-detached house, annual rental income rises to £16,535 and £19,509 respectively.

“A lot of tenants are willing to pay guide price and above to secure a property, but especially so if they have pets,” added Mr Jarvis.

“There is a real lack of landlords who are willing to allow animals in their rentals, so tenants are offering higher bids to persuade them otherwise, sometimes to the tune of hundreds of pounds extra each month.”

By Rachel Mortimer

Source: Telegraph

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Property prices reach new record rising another 1.6%: Rightmove

The price of property coming to market has hit a new record high for the third consecutive month, with an average monthly increase of 1.6% rising by £5,537, according to the latest data from Rightmove’s house price index.

The data showed that house prices have risen by £19,082 over the last three months, which is the largest three-month price increase that Rightmove has recorded, as high buyer demand has enabled sellers to ask and achieve higher prices.

With not enough property available on the market, sellers are able to find a buyer quicker than ever before, according to Rightmove, and twice as quickly as in the same period in the more normal market of 2019.

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Despite the growing economic headwinds, Rightmove forecasts that these headwinds will slow the pace of price rises as the year progresses.

With three new monthly price records in a row, Rightmove director of property data Tim Bannister comments: “2022 has started with price-rise momentum even greater than during the stamp-duty-holiday-fuelled market of last year.”

Bannister says: “While growing affordability constraints mean that this momentum is not sustainable for the longer term, the high demand from a large number of buyers chasing too few properties for sale has led to a spring price frenzy, a hat-trick of record price months, and the largest price increase for a three-month period Rightmove has ever recorded.”

“The strong momentum has carried over from last year and, combined with the impetus of the spring moving season, has delivered the quickest selling market we’ve ever seen. The high speed of the market and competition among buyers when making an onward move will be deterring some owners from putting their homes up for sale.”

Three months of price growth in the midst of rising inflation and interest rates, as well as the ongoing economic uncertainty, according to MT Finance director Tomer Aboody, “further highlights the lack of properties coming onto the market. This is creating huge competition among buyers, which is driving prices ever higher”.

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Aboody comments: “While the chance of further interest rate rises is extremely high, buyers are taking advantage of low rates and fixing for as long as possible in order to manage their mortgage payments over the next few years.”

He highlights that a change in stamp duty is needed so that more sellers look to sell, increasing supply and stabilising house prices.

The index also showed that across Great Britain in Rightmove’s lower, middle, and upper market sectors, properties are at new record price levels, which is only the second time since 2007 that such an event has been recorded, with the previous ‘full house’ being earlier in this property frenzy in October of last year.

In 2019, the average time to sell was 67 days, the index’s latest data showed that it currently stands at an average of just 33 days before a property is marked as sold subject to contract on Rightmove.

With properties selling faster than ever, 53% of properties that sell are now selling at or over their final advertised asking price, the highest percentage the index has ever measured.

Rightmove says that properties are achieving 98.9% of the final advertised asking price on average, which is also the highest percentage since its records started.

However, it has been highlighted that the pace of price rises is beginning to tail off a little, with this month’s increase of 1.6% being lower than the 1.7% and 2.3% in the previous two months.

While it is normal to see modest seasonal price falls in several months of the second half of the year, with stock remaining at record lows and underlying strong demand, Rightmove says it does not expect the falls to be any more significant than usual this year.

Henry Dannell director Geoff Garrett comments: “While we don’t expect to see market activity evaporate completely, the growing cost of living will be a significant factor in the months to come and as household finances are stretched, it’s likely that prospective buyers will ease off on the sums they’re willing to offer. As a result, sellers will need to realign themselves with these changing market conditions and this will cause the rate of house price growth to cool.”

By Becky Bellamy

Source: Mortgage Finance Gazette

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UK housing market shows signs of stability with Brits’ reluctant to spend

The UK housing market could be returning to stability, say analysts, before deals pick up as warmer weather blankets the country.

Residential transactions for March have plunged more than a third in comparison with the same month last year, according to the government’s latest figures, after a continued, pandemic-era, buying frenzy.

Although deals have climbed 18 per cent higher than February, HMRC data showed, as gloomier weather recedes.

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“Could this be the turning point with spring and summer upon us when the market finally gets some stability and pricing normalises?,” Tomer Aboody, director of property lender MT Finance, questioned.

It follows the end of the stamp duty holiday, which saw real estate agencies report record activity as buyers raced to climb the property ladder.

Despite the logistics real estate market taking off in the UK, as businesses seek to bring distribution hubs closer to home, non-residential deals sank nearly six per cent year-on-year – but have surged 36.6 per cent in comparison with February.

With non-residential transactions “still trailing behind” their residential counterparts, Aboody urged for business rates reform, in a bid to lure retailers back to high streets after a bleak pandemic period.

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Cost of living squeeze

The levelling out of transactions year-on-year could signal how potential buyers are feeling less reluctant to splash the cash given the UK’s economic and inflationary position.

“The rising cost of living and interest rates, especially for those on tight budgets, are contributing to an easing of price growth and a drop in sales,” said north London estate agent Jeremy Leaf.

However, “Demand still comfortably exceeds supply and correctly-priced houses continue to attract considerable interest while mortgage repayments remain relatively affordable,” he added.

Senior pensions and retirement analyst at Hargreaves Lansdown, Helen Morrissey, chimed, explaining that Brits’ squeezed finances are ‘dampening’ the appetite for new homes.

“Comparisons with last year are tricky with the stamp duty holiday and the pandemic race for space causing a huge surge in activity but while the number of transactions is down on this time last year, it is still a massive 18 per cent up on last month’s figure,” she continued.

“How long the market can maintain this momentum remains to be seen as there are significant headwinds incoming.”

By MILLIE TURNER

Source: City AM

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House prices set to rise further based on transactions currently underway

UK house prices look set for new record highs in the coming months despite the cost of living squeeze.

Residential property prices have continued soaring in recent months despite 30-year high inflation and a worsening cost-of-living crisis, and the signs are that they will rise further in the coming months in light of the ongoing supply-demand imbalance.

The imbalance between supply and demand will continue to drive prices upwards through the spring despite growing pressures on household finances and rising borrowing costs, with the average property price in England and Wales set to hit a new record high of £389,712 in June 2022, according to the reallymoving House Price Forecast.

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The supply crunch, which has seen the volume of properties for sale plummet to record lows, combined with unseasonably strong buyer demand, is preventing sale prices from falling, as would normally be expected when households experience sudden financial pressure.

Reallymoving captures the purchase price buyers have agreed to pay when they search for conveyancing quotes through the comparison site, typically 12 weeks before they complete. This enables reallymoving to provide a three – month house price forecast that historically has closely tracked the Land Registry’s Price Paid data, published retrospectively.

Based on deals already agreed between buyers and sellers, prices will rise by 4.7% in April and 6% in May before slowing to growth of 1.3% in June – a direct result of buyer competition for a limited supply of homes during the early months of the year.

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However, the market is expected to flatten later this year as inflation bites further and mortgages become more expensive.

Rob Houghton, CEO of reallymoving, commented: “House price forecasts for the coming quarter suggest we’re heading into a period of strong price growth, but when taken in the wider context what we’re actually seeing are prices being inflated by a severe supply squeeze. This is forcing the market upwards, masking the impact of inflation and rising costs on household budgets which we would normally expect to rein in price growth.

“Having less money in their pockets will ultimately deter people from taking on more debt as they move up the ladder, and at some point in the near future this will slow house price growth. Much will depend on the volume of new listings we see coming onto the market and the speed at which lenders push up the price of fixed rate mortgages.”

By MARC DA SILVA

Source: Property Industry Eye

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House prices to reach record high, shows Reallymoving data

The average house price in England and Wales is set to continue to rise over the next quarter to a new record high of £389,712 in June 2022, according to Reallymoving’s March House Price Forecast.

The forward-looking index, which captures the purchase price buyers agree to pay when they search for conveyancing quotes, suggests that the imbalance between supply and demand will continue to drive prices upwards through the spring despite growing pressures on household finances and rising borrowing costs.

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The supply crunch, which has seen the volume of properties for sale plummet to record lows, combined with unseasonably strong buyer demand, is preventing sale prices from falling, Reallymoving’s data found.

Based on deals already agreed between buyers and sellers, it predicted that prices will rise by +4.7% in April and +6.0% in May before slowing to growth of +1.3% in June.

The rises are said to be a direct result of buyer competition for a limited supply of homes during the early months of the year.

After the Bank of England increased the base rate 0.75% last month, the current run of house price growth is likely to slow later this year, according to the data.

House prices have risen by more than 10% compared to this time last year and are £66,000 higher than when the pandemic started.

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For first-time buyers that are tempted to wait for a decline in house prices, Reallymoving says buying with a long-term view will help ride out any short-term fluctuations and locking in a fixed-rate deal will help save money in the long run.

Meanwhile, for those looking to downsize to a smaller property as the cost living cost continues to rise, data suggests releasing equity now will help to secure the maximum price for the property.

Reallymoving chief executive Rob Houghton says: “House price forecasts for the coming quarter suggest we’re heading into a period of strong price growth, but when taken in the wider context what we’re actually seeing are prices being inflated by a severe supply squeeze.”

Houghton explains: “This is forcing the market upwards, masking the impact of inflation and rising costs on household budgets which we would normally expect to rein in price growth.”

“Having less money in their pockets will ultimately deter people from taking on more debt as they move up the ladder, and at some point in the near future, this will slow house price growth. Much will depend on the volume of new listings we see coming onto the market and the speed at which lenders push up the price of fixed rate mortgages,” he adds.

By Becky Bellamy

Source: Mortgage Finance Gazette

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