The average London house price increased by 0.1 per cent in February to £260,375, up from £260,140 in January. This showed prices have stabilised as buyers remain price sensitive despite a continuing shortage of available stock.
Paul Smith, chief executive of haart, commented: “The effect of the recent interest rate rises, in particular the shock rise in January, has started to kick in. Buyers have become wary about over-stretching their borrowing capacity and over-priced properties are not selling despite a high level of demand.”
However the supply and demand ratio is set to be re-balanced in the forthcoming months. haart predicts a 20 per cent increase of properties to enter the market, in the run-up to the compulsory roll out of HIPs. The packs will have to be purchased by the seller prior to marketing a property and the mandatory part of the pack will include: an Energy Performance Certificate, title documentation, local searches and leasehold documentation (if relevant).
Smith continued: “With the introduction of HIPs fast approaching, we are expecting to see an extremely buoyant spring market as many sellers opt to put their property on the market prior to 1 June, to avoid the cost of a pack. With the high demand for properties still unsatisfied and the expected surge of properties for sale we anticipate property prices to increase by 3 per cent by the summer months.”
First-time buyers are one of the most vulnerable groups to interest rate rises and their market share dropped 0.5 per cent to 25.5 per cent of the market. haart warns that any further interest rate rise will result in the first-time buyer level plummeting.
Smith said: “Although there is only a slight decrease in the first-time buyer level, the three interest rate rises in quick succession since August have knocked the confidence of many. Any further rate rise is certainly going to put a stop to this crucial group entering the property market.”
