The Nationwide has released figures showing rising house prices with a steep 7.1% rise compared to this time last year prompting fears that the UK housing market is ‘on the boil’. Average property prices rose by £15,916 over the past 12 months, to reach an average price of £238,831.
Although people have managed to save during the lockdown, putting first time buyers in a stronger position to afford a home, the fact that homes available have not been matching demand has meant that prices have kept on rising.
Lucy Pendleton, from independent agents James Pendleton, said: “Silly season might be just around the corner. That’s when a seller’s market becomes entrenched against a backdrop of very high demand and you start to see open houses for properties that are nothing special and a return of gazumping.”
House prices rose sharply in April according to the Nationwide’s figures, up by 2.1% compared with March. This growth, and the year-on-year increase, could be being fuelled by a number of factors; the extension to the stamp duty holiday announced by the Chancellor coupled with the pandemic leading people to reassess their domestic arrangements being the two biggest drivers.
The market activity has been so frantic in some areas it has led to people queueing overnight outside an estate agent in Wales as homes for a new development were about to be released onto the market.
Nationwide’s figures are based on its own mortgage data, and it suggests that the market is likely to continue to be busy for the next six months, owing to the stamp duty relief.
Price growth was also likely to accelerate, it said, with demand expected to exceed the supply of homes on the market.
The current situation makes it more difficult for first time buyers. Some will have been able to use the lockdown to save more than they would previously been able to. This, coupled with help from family, does mean that there will be some in a stronger position than previously, but this won’t be spread evenly throughout the population. and rising house prices can erase these savings gains.
Analysts also expect that unemployment will rise sharply towards the end of the year as the furlough scheme comes to an end meaning that there is scope for activity within the market to slow, perhaps significantly.
Nicky Stevenson, managing director at estate agent Fine & Country, said: “Numbers like this won’t last forever but the market may not begin to unwind until the busy summer season is out of the way.”
Given the multiple unknown factors that can influence the market, that the longer-term outlook for the housing market is more “uncertain”.
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