03 Jul Average UK house price hits a new record, but there are signs of a slowdown
The average price of a UK property has hit a new record, but there are tentative signs of a slowdown revealed in the latest monthly figures from Nationwide. The average price now stands at £271,613 – representing a £26,000 rise in the past year, with the biggest increase being in the south-west where prices have risen 14.7% during the second quarter of this year. House prices increased by 0.3% in June, compared to a 0.9% rise in May representing signs of a slowdown in the property market. The pace of growth slowing can be attributed to a better balance between supply and demand, and usual seasonal price drops are due to further stem price growth in the coming months.
Despite five consecutive interest rate rises and the increased cost of living, buyer demand for properties remains strong with the rate, found by Rightmove, representing more than double (+113%) the pre-pandemic five-year May average. This comes alongside the announcement that lenders will no longer have to check whether homeowners can afford mortgage payments at higher interest rates, as the Bank of England withdrew the affordability test. This will remove a considerable barrier for many aspiring homeowners, but it is also expected to contribute further to skyrocketing prices as a result of increased demand.
Currently, it is taking 150 days on average to complete a purchase after agreeing a sale on a property, this represents 50 days longer than the levels in 2019. This has been caused by a conveyancing log-jam and supply chain issues, with more than 500,000 homes being sold subject to contract – 44% higher than in 2019. Alongside this, 53% of properties are selling at or over their final advertised asking price and 98.9% of properties are achieving their final advertised asking price according to Rightmove.
Simon Bath, CEO of iPlace Global, the creators of Moveable, explains why prices could continue to fall:
“Nationwide’s latest report on house prices will undoubtingly seem daunting for a large number of prospective homeowners. However, we are seeing smaller increments in the rise of prices, exhibiting signs that the property market is cooling.
“Whilst I predict that the housing marketing will see a slowdown in the coming months, it is also worth noting that there are still significant hurdles to overcome in terms of supply and demand. The government has recently announced various plans to overcome the supply chain issues in the market, which could further help to put the brakes on rising prices over the next year. Hopefully with these new schemes, we will potentially see a continuous decline in house prices to balance out growing inflation.”
David Hannah, Group Chairman at Cornerstone Tax, discusses whether the property market is set for a slowdown:
“Despite the consistent rise in UK house prices, I think there are signs of a slowdown. The average house price saw a month-on-month rise of 0.3% in June, which is lower than May’s 0.9%, combined with the expected rise of inflation to reach double digits towards the end of the year, I believe the rise in house prices will continue to slow.
“If more properties do enter the UK housing market, a more manageable supply and demand level will be seen and subsequently halt the rapid rise of property prices. There are positive signs in relation to this, with figures showing an increase in new listings in the UK, which will put an even harder brake on the incredible rises we’ve seen over the past few months.”
