The latest eye-watering figures have been released
Average house prices have risen more than £55,551 in the past two years, compared to a £6,218 rise in the two years before the pandemic, the latest Rightmove House Price Index has revealed.
The price of property coming to market hit a fourth consecutive record of £367,501, up by 2.1% monthly, or an equivalent of £7,400. This month’s increase of 2.1% is the highest at this time of year since May 2014.
Rightmove noted that this fourth consecutive new high came alongside a fourth successive interest rate rise. However, this rate rise, and other household economic concerns, do not appear to have dented the motivation and urgency to move that is felt by many.
“People may be wondering why the housing market is seemingly running in the opposite direction to the wider economy at the moment,” Tim Bannister, director of property science at Rightmove, said. “What the data is showing us right now is that those who have the ability to do so are prioritising their home and moving, and the imbalance between supply and demand is supporting rising prices.”
James Forrester, managing director at Barrows and Forrester, shared the same thoughts.
“The UK property market continues to zig while the wider economy zags, and this is due to the fact that the scales of supply and demand remain tipped firmly in favour of the nation’s home sellers,” he said.
Activity levels remain strong and still significantly higher than pre-pandemic, though there are signs that the frenetic market is starting to ease, according to the report.
Read more: Housing boom could end soon – Nationwide.
The number of buyers contacting estate agents in the month was 31% higher than the more normal 2019 market, but down 14% year-on-year.
The number of properties available to buy was 55% down on the levels seen in 2019, meaning that supply and demand look likely to remain imbalanced for at least the rest of the year.
The number of sales agreed was up by 12% in the year to date compared to 2019 even with restricted choice, but was down 17% compared to the exceptional market of the same period last year.
Rightmove explained that these numbers suggest that a lack of homes for sale rather than a lack of desire from buyers is what is dictating the pace of the market.
“Though demand is softening from the heady levels we saw this time last year, the number of buyers enquiring is still significantly higher than during the last ‘normal’ market of 2019, while the number of homes for them to choose from remains more constrained,” Bannister said.
New stock is most urgently needed in the mid-market sector of two and three-bedroom semi-detached homes, which are seeing the most competition from buyers.
Meanwhile, the new Rightmove analysis also tracked first-time buyer affordability and the impact of rising interest rates.
Average monthly mortgage payments are back to being higher than rental payments after four consecutive interest rate rises, though historically low interest rates make mortgage payments only 11% higher than 10 years ago, while rental payments are 40% higher.
Solo first-time buyers are the hardest hit, now needing a 34% deposit compared to a 25% deposit 10 years ago.
“Spare a thought for the nation’s hard pressed first-time buyers who can only sit and watch as the task of saving a deposit to secure that first foot on the ladder once again starts to spiral,” Christina Melling, chief executive at Stipendium, said.
“Not only have they had to struggle to save as a result of record low interest rates in recent times, but now they are ready to buy, the cost of a mortgage is starting to climb and will continue to do so as interest rates increase over the coming year.”
Read more: What worries first-time homebuyers the most?
Bannister said their new analysis showed how it had become increasingly difficult for an average first-time buyer to afford a home on their own.
“The historic average mortgage payments for a first home provide some good context to the current backdrop of rising interest rates and help explain why so many people take out fixed-rate mortgages,” he said.
“We anticipate that the effects of the increased cost-of-living and rising interest rates will filter through to the market later in the year, and a combination of more supply of homes and people weighing up what they can afford will help to moderate the market,” he continued.
Bannister, however, stressed that the market is still extremely difficult to predict, with so many variables affecting house prices and affordability. Other industry experts agreed.
“Those in their tin hats may wish to start sowing the seeds of doubt with regard to future market health, but the reality is that the UK property market will remain impervious to the external influences of economic instability currently making the headlines,” Forrester said.
Read more: Is there really a property crash coming?
Marc von Grundherr, director at Benham and Reeves, commented that it’s unlikely that demand and property values will “come plummeting back to earth with a thud.”
“We do expect that a more muted market performance lies ahead, as buyers face the reality of rising interest rates and wider economic instability,” he stated.
“Buyer interest and sales volumes remain very high, however, a correction is most certainly on the way, although this is likely to come in the form of a return to normality, not a market collapse,” Jonathan Samuels, chief executive at Octane Capital, added.
Geoff Garrett, director at Henry Dannell, said buyers are already starting to tread with greater caution as they are finding that the cost of borrowing is no longer as affordable as they may have expected.
“This has caused mortgage approval levels to dip and house price growth is also starting to plateau where the actual price paid for homes is concerned. It won’t be long before buyers are forced to accept this reality and adjust their asking price expectations in order to secure a buyer,” he added.
