Stock shortgages and strong buyer demand will continue to drive house prices up, resulting in a 5.5% spike over the next three months, according to Reallymoving’s February House Price Forecast.
The forward-looking index, which captures the purchase price buyers agree to pay when they search for conveyancing quotes, predicts average house prices in the UK will climb to an all-time high of £352,984 over the period, as initial signs of slowdown at the start of the year start to dissipate.
House prices are set to fall by 0.9% in March and 0.2% in April, according to the comparison site, but surge by 6.7% in May.
According to Reallymoving, the expectant trend is a “direct result” of buyer competition for a finite supply of homes during February.
“We are seeing a clash of post-pandemic-driven buyer demand and a cost-of-living crisis which is only now really beginning to bite, and as yet it remains a seller’s market and the supply/demand imbalance is continuing to push up prices,” says Reallymoving CEO, Rob Houghton.
“It is too early to assess the impact on consumer sentiment from the war in Ukraine and if uncertainty grows and prices rises become more painful, I expect we’ll see the tables begin to turn,” he adds.
According to the data, despite the Bank of England announcing another hike to the base rate last month, buyer demand remains strong, driven by borrowers seeking to “lock in” a fixed rate at the lowest price.
Those with a good level of equity will be in a better position to absorb expected price rises, according to Reallymoving, as well as additional borrowing costs that come into play.
“First Time Buyers are stuck between a rock and a hard place, watching prices go up along with mortgage rates, while facing the challenge of trying to save while paying record high rents – and a shortage of homes to buy,” says Houghton.
“Many will be tempted to hold out for price falls but our advice would always be to move when you have all your ducks in a row in terms of raising a deposit, securing a mortgage and finding the right home to buy at a price you can afford,” he adds.
