Has the affordability crisis halted house price growth?

Much like the weather, every aspect of the UK economy has been fluctuating in recent months. Whilst it now seems to be in crisis mode, the housing market marches ahead boldly. Let’s explore…

All you need to know about the recent housing market...

Average house prices hit a record high in June, which may come as a surprise. According to Rightmove, asking prices hit a record for a fifth consecutive month, rising by 0.3% – or £1,113 – to reach an average of £368,614. However, this was the smallest monthly increase since January, with the site saying: “The exceptional pace of the market is easing a little.”

What’s happening with buyer demand? Is it still strong? 

According to Rightmove, buyer demand for each available property is down by 8% in May compared to April, but remains 6% higher than last year, and more than double (+113%) the pre-pandemic five-year May average. The housing market frenzy and increased demand from buyers earlier in the year was partly caused by the lack of available properties. Many newly listed homes were snapped up within a week or two. 

Will rising interest rates cause house prices to fall?

It’s difficult to tell. The increase in house prices very much depends upon the supply and demand of property. With the supply of available property still so low – and properties in short supply, the increased buyer demand ensures prices remain high. If, however, household finances are continually squeezed then experts suggest that house price increases may slow down by the end of the year.

How much is my house worth?

Should sellers come to market now or wait?

Something for you to factor in is when you would like to sell up and move. Remember that conveyancing can be a lengthy process and means sellers need to come to market in the next few weeks to be in with the best chance of moving before Christmas. Yes, we know. It’s odd to think about Christmas in the summer months but with the average time to get through conveyancing currently 150 days (that’s 50 days longer than at this time in 2019), it’s something for you to factor in. 

When will the housing market crash?

We don’t think it will. We will probably see some of the usual seasonal variations in asking price, which is typical of this time of year. We also expect to see some month-on-month price falls during the second half of the year as the balance between supply and demand evens out, and the cost of living stretches affordability. For this reason, if you’re really looking to secure the best price for your property, you’re best coming to market now, whilst house prices are at an all time high. 

What’s the outlook for the lettings market?

The Centre for Economics and Business Research says rents agreed for new contracts rose by 10.6% in the year to May, with those in London rising the fastest, at 15.7%. The average monthly mortgage payment, according to Rightmove, for a typical first-time-buyer home has increased by 13% (+£100) since December last year following five interest rate rises. Equivalent monthly rental payments are 40% higher than ten years ago, so for landlords, there are still good profits to be made in the buy-to-let arena.

Has your property increased in value?

Sources: https://www.ons.gov.uk/
Rightmove House Price Index June 2022