House prices have increased an average of 18% since the first lockdown two years ago. A combination of limited properties on the market and a herd of buyers looking for more space fueled the huge price growth.
But conditions are changing. Inflation is officially running at around 7% but household necessities such as domestic energy and petrol cost 30-50% more than just a few months ago. Add in increases in taxation and most household budgets are under a new level of stress.
And then there are interest rates. Up to 0.75% from a pandemic low of just 0.1% with the hint of more to come as the Bank of England looks to get inflation back to a manageable level over the remainder of 2022.
Typically, this level of pressure to affordability would be damaging to the property industry and likely produce a leveling off of prices. But, for now, prices continue to surge. Using data from Reallymoving which captures prices agreed between buyers and sellers seeking conveyancing quotes (typically around 12 weeks before completion) the whole of the second quarter will continue to see strong price growth.
This may simply be the lag between domestic cost increases happening and homeowners feeling the bite and altering their decision-making accordingly. Only time will tell, but if there was one thing the pandemic taught me, it was never to underestimate the British public’s desire to buy property regardless of the wider context!