HOUSE PRICES SET FOR SHARP RISE THIS SUMMER

HOUSE PRICES SET FOR SHARP RISE THIS SUMMER
Jun 25 , 2021

Deals agreed between buyers and sellers during March and April will result in monthly price increases of 2.9% in June and 3.7% in July when those deals complete, according to the Reallymoving House Price Forecast April 2021.


Despite warnings from agents and surveyors of limited new supply, activity remains exceptionally strong with conveyancing quote volumes in April at around 60% higher than normal levels for the time of year.


Reallymoving captures the purchase price buyers have agreed to pay when they search for conveyancing quotes through the comparison site, typically 12 weeks before they complete. 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.


Stamp duty savings may have been wiped out by price rises, but buyers are undeterred, with a large proportion having accrued substantial savings during lockdown and in a position to review their location thanks to permanent flexible working arrangements.


Borrowing costs remain low and those with plenty of equity are in a strong position to move up the ladder to a property that better meets their new requirements.


Annually, prices have remained in positive territory since September last year, with annual growth accelerating in the run up to the New Year and then slowing in the first few months of 2021.


From June annual growth will begin to rise strongly again based on deals agreed this spring, with prices in June 6.5% higher than a year previously, and in July 7.8% higher year on year.


Rob Houghton, CEO of reallymoving, said: “Looking ahead to the summer we’re continuing to see an exceptionally strong performance from the housing market across the UK, with buyer demand showing no signs of abating.


“A shift in the priorities of homebuyers has resulted in strong demand from equity-rich homebuyers higher up the ladder who, freed from their daily commute, are able to look further afield for a home with the kind of space and location they’ve long dreamed of.


“Backed by lockdown savings and encouraged by rock bottom interest rates, many people are determined to secure a home that meets their new needs, despite fierce competition – and it’s these movers who are driving sharp increases in average prices.


“Despite this, first-time buyers continue to maintain a market share of around 55% – which could rise further now the government-backed 95% loans are available.”


This only coincides with the latest house price index from Zoopla which shows high UK sales but a lag in supply and predicted that the number of sales completions would hit 1.5m this year, up from 1.04m in 2020.


Concurrently, it said that the value of sales in 2021 would be 68 per cent up on 2019, with annual house price growth currently at 4.1 per cent.


However, housing stock remains constrained, said Zoopla, with the total stock for sale down by 20.8 per cent between mid-May 2020 and today.


The shortfall between supply and demand was an issue picked up by Sundeep Patel, director of sales at Together.


He said: “While record low interest rates and government incentives have clearly boosted activity, there are severe supply and demand issues to be cautious of in the long-term.”


Others, such as Nigel Purves, CEO of Wayhome, said that there were ‘clear imbalances’ in the system.


He added: “Those who’ve managed to accrue savings over the last year are likely to be taking advantage of the record low interest rates and Government initiatives to secure homes that truly meet their changing needs after a year in lockdown. But others aren’t so lucky; many are stuck in rental properties which aren’t fit for purpose, and homeownership is out of their reach despite earning good incomes. We need to see real change and fast. Creating options that will ensure those who find themselves trapped in a renting cycle have an alternative route onto the property ladder is key. For this to become a reality, innovation is needed to create new pathways into homeownership.”


Contact the team at Opal Property or on 0203 355 8785 if you are you looking to buy or if you have a property to sell either with tenants in situ or vacation possession.


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