The housing market in England and Wales will slow in the run up to Christmas, with average prices rising by just 0.1% to £335,924 at the end of the year, according to Reallymoving.
The firm, which provides free instant quotes for home-moving services, says high levels of demand and a limited supply of homes for sale drove prices agreed between buyers and sellers in July.
A lag in completions will translate to a 1.3% increase in completed sale prices in October.
But the firm says the autumn and early winter “will bring a change in tempo with prices falling by 0.1% November and 1.1% December”.
Reallymoving’s forecast is based on data submitted on more than 19,000 conveyancing quote forms on its website.
It says this data captures the purchase price buyers have agreed to pay when customers search for conveyancing quotes through its comparison site, typically 12 weeks before they complete.
The firm says: “This enables Reallymoving to provide a three-month house price forecast that historically has closely tracked the Land Registry’s Price Paid data, published retrospectively.”
It adds that conveyancing quote volumes fell 4% between August and September, indicating that buyer demand is settling back down to more normal levels, following the end of the stamp duty holiday in September.
The firm’s September report says: “House prices will rise by +1.3% in October as a result of deals agreed between buyers and sellers in July due to continued strong demand post stamp duty holiday and the limited supply of new properties coming on the market, creating greater competition for homes.
“This will be followed by a marginal fall of -0.1% in November and a larger fall of -1.1% in December, reflecting a drop in demand from buyers in the late summer as the post-pandemic property boom began to subside.”
It adds: “The extended period of double-digit year on year price rises we’ve seen over most of 2021 is over, with annual growth dipping into negative figures in October (-0.6%) for the first time since August 2020, before recovering to +1.3% in November and +0.7% in December.”
Last month, house prices lifted 1.2% to an average of £328,610, according to the latest e.surv Acadata House Price Index, a 3.6% annual rise.
However, observers point out that the Bank of England may hike rates from its historic 0.1% to 0.25% next month to combat rising inflation sparked by shortages, bottlenecks and energy price rises as the UK economy bounces back from the pandemic.
Inflation is currently 3.1%, above the Bank’s 2% target, and the central bank has forecast that it will hit 4% for a short period next year.
Reallymoving chief executive Rob Houghton says: “A return to slower growth and a steadier housing market is welcome, but there are a number of factors converging which could knock consumer confidence over the coming months such as the supply chain crisis, rising inflation and living costs, plus the prospect of increasing interest rates – though it’s too early to see their impact in the data yet.
“While the reduced supply of new homes for sale is making things difficult, buyers who are ready to move now are keen to press ahead and lock in a fixed-rate mortgage deal, helping keep their borrowing costs low.
“First-time buyers who have found themselves increasingly priced out of the market will be encouraged by evidence that the post-pandemic property boom is running out of steam, with prices falling over the final quarter in five UK regions and less competition for starter homes now that stamp duty incentives are over.
“For those who have held off making their move due to the frenzied market conditions over the last few months, now is a good time to buy and lock in a five-year fixed rate deal that will insulate them from any imminent rate rises and make it easier to ride out any short-term inflationary pressures.”
