New figures from estate agents show the demand for homes is continuing to increase whilst the supply of properties is falling as the impact of the ‘race for space’ maintains its influence on the property market.
Official figures released yesterday by HMRC showed, following a dip in sales when the Stamp Duty Holiday ended, the number of purchases increased again by 24.3% in November.
Meanwhile, the professional body for estate agents, NAEA Propertymark, revealed the number of buyers registered to its branches climbed by 12% in November compared to the previous month.
But, at the same time, the supply of homes fell to just 20 per branch – the lowest ever recorded and 50% fewer than November 2020.
Nathan Emerson, chief executive of Propertymark said: “The pressure on the housing market and consequently house prices, is continuing at an unrelenting rate. However, heading into December, the market should start to slow.
“Those with a property to sell would be wise to act sooner rather than later as the level of demand is expected to continue into the first quarter of next year but cannot last forever.”
Interest rate rises
One factor which may put a stop to the imbalance going forward is the recent Bank of England (BoE) decision to increase interest rates to 0.25%. Indeed, many are speculating with mortgage rates set to climb in line with this, buyers may well reconsider plans to move.
Karen Noye, mortgage expert at Quilter, explained many mortgage lenders had begun raising interest rates in November before the BoE rise as a result of wide speculation of a hike.
She added: “Now the Bank has raised rates to 0.25%, prospective buyers may well be put off. Highly inflated house prices coupled with higher mortgage rates as a result of the hike will make buying a home all the more unaffordable.
“First-time buyers, who are already often dealt the highest mortgage rates due to high loan-to-value ratios, will see the property ladder pushed one step further away.
“While it may make buying a home more difficult in the short term, the interest rate rise could well serve to knock back the massively inflated housing market. As less people are keen to move and demand decreases, house prices may well fall – albeit probably at a slower pace than some may hope.”
