Regarding the reasons behind continued house price growth, Harper said: “Housing transactions and prices were encouraged by the temporary stamp duty reduction, which was designed to boost the housing market and confidence through the pandemic, as well as lockdown-led upsizing and a flight to safer assets.
“Alongside this, interest rates remain low, which helps to explain why house prices are rising so much faster than wages: money is cheap and accessible.”
While this has caused some concerns around the potential for a crash, Harper explained that this is unlikely to happen while demand is still growing, and supply is “increasingly constrained.”
She said: “We’re seeing less housing stock on the market in our day-to-day work, and in the data.
“And, unless interest rates rise significantly, it’s unlikely that we see a mass sell-off from property owners.
“Further, land and planning constraints and the growing cost and complexity of construction mean limited supply is likely to continue.
“We need 340,000 new homes up to 2031 and remain well below this, at around 160,000 each year for the past two years.”
Harper added that the long-term trend of prices rising faster than average wages would likely continue, saying: “This is backed up by the data: according to Halifax, in July, house prices were £18,537 higher than this time last year, a figure far higher than average wage growth.
“This makes ‘affordable home ownership’ for most younger and less well-off people unlikely, without taking on huge debt or seeking government support.”
