House prices continue to rise
The media today is full of stories about the ongoing rise in house prices in the United Kingdom. According to the Nationwide Building Society, prices rose by 13.4% over the last year, whilst the Halifax calculates the rise at 9.5%. There are wide variations in price rises regionally as well. Northern Ireland and Wales have had the sharpest rises over the last year with London reporting a rise of just 7.3%. As we have reported before, a lot of the regional variations are being driven by Covid-19 related factors. People are now looking for green spaces, bigger gardens and extra rooms to act as a home office. Towns are not seen as attractive as they once were to people looking to buy property.
Are the market conditions sustainable?
The continued rise in house prices is starting to raise questions in people’s minds about the sustainability of present market conditions. Pressures on first time buyers are getting greater and it’s only the low interest rate environment making mortgages affordable to the average person in the street. The stamp duty relief will start to be withdrawn from the end of June and return to where it was before the pandemic, by October. That will also coincide with the end of the furlough scheme. That leads to the joint pressures of higher costs of buying property combined with increased employment uncertainty weighing down on property market activity.
The counter balance to those “slowing the market” factors is that people still want to move into greener environments and the lack of properties for sale on the market is keeping supply tight. That then tends to keep prices high. That will offset some of the negative pressures on the rise in property prices as we go into the second half of the year.
What rhw’s property team think will happen
At rhw we think there will be a “correction” in house prices in the next few months but not a dramatic collapse. We have extraordinary factors at play in the market that go beyond the usual economic levers associated with the property market in this country. As is proved time and time again, if you are thinking of buying property for the medium to long term, you are nearly always going to find yourself in a positive situation down the line.
Don’t cut corners with property purchases
A house or flat purchase is usually the largest financial investment you will ever make. Don’t cut corners on the agency or conveyancing process. You need the advice of an experienced estate agent and a solicitor who will ask the right questions and tell you what you need to know about the property you are thinking of buying, whether that news is good or bad!
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