It’s the ninth month in a row prices have climbed and Halifax is attributing the 1.4% monthly increase in March to ‘too many buyers chasing too few properties’.
Indeed, the mortgage lender reported prices had soared by 11% in the last year and the average UK property now costs £282,753 – another record high.
Two years on from the first lockdown, prices have risen by £43,577 on average – highlighting just how powerful the impact of the pandemic has been on the property market.
Russell Galley, managing director of Halifax, said: “The story behind such strong house price inflation remains unchanged: limited supply and strong demand, despite the prospect of increasing pressure on households’ finances.
“Although there is some recent evidence of more homes coming onto the market, the fundamental issue remains that too many buyers are chasing too few properties.
“The effect on house prices makes it increasingly difficult for first-time buyers looking to make their first step onto the ladder, but also challenges homemovers who face ever bigger leaps to move up the rungs to a larger property.”
Slowdown looming
He thought rising interest rates combined with the higher cost of living would eventually lead to a slowdown in house prices later this year, however.
Emma Cox, director of real estate at Shawbrook, agreed. She said: “A correction of sorts is not out of the question as the year progresses, as prices may begin to cool off and fall in line with current inflation and interest rates.
“The property market is crying out for an influx of affordable, quality housing supply which will alleviate demand and help to bring house prices down to a more realistic level, in line with wage growth.”
Is now the time to move?
With prices high but forecasts suggesting they may fall, where does this leave potential buyers and sellers?
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown said while homeowners might feel better off on paper, for anyone trying to get onto the ladder, or move up it, this was pushing properties even further out of reach.
She said: “For those who are considering trading down, or are happy staying where they are, it makes them feel wealthier, and provides an element of comfort when everything else in life is conspiring to make them less well off.
“However, for anyone saving to get a place of their own, this means you’re having to run to stand still.”
Sarah also said it was important to consider the wider economic events such as the cost-of-living crisis. She added: “Right now may well not be a sensible time to stretch yourself. While prices are still rising robustly right now, there’s every chance that soaring bills and rising interest rates will take their toll in the coming months.
“And quite aside from whether or not on paper your home continues to gain value, there’s the question of what you can afford.
“You need to ask yourself whether now is the time to be taking on a bigger, more expensive loan, when the price of everything else is going through the roof, and tax hikes are shrinking your pay packet.”
