June saw UK house prices hit yet another record high but prices are likely to start falling over the coming months, according to the latest house price data from Rightmove.
This marks the fifth consecutive increase in prices, which were up 0.3% – or £1,113 – to reach an average of £368,614.
But Rightmove warned that “The exceptional pace of the market is easing a little”.
“What the data is showing us right now is that those who have the ability to do so are prioritising their home and moving, and the imbalance between supply and demand is supporting rising prices,” said Tim Bannister, Rightmove’s director of property science.
“We anticipate that the effects of the increased cost of living and rising interest rates will filter through to the market later in the year, and a combination of more supply of homes and people weighing up what they can afford will help to moderate the market.”
Meanwhile, in separate analysis from the EY Item Club took a more optimistic view. EY predicts house prices will see “continued growth”, with a crash “unlikely”, and estimates that the typical property will end this year worth £52,000 more than it was before the Covid-19 pandemic.
EY predicts that prices will end 2022 up 8% and will rise by 1.8% and 1.2% in 2023 and 2024 respectively.
Reaction
Tomer Aboody, director of property lender MT Finance:
“With the housing market looking slightly more subdued compared with previous months, we may finally be seeing the anticipated slowdown in price growth. Several factors, such as the rising cost of living and interest rates, are behind this.
“Buyers are increasingly cautious in their bidding, not so prepared to stretch themselves and also shying away from taking on renovations or other home improvements, due to the uncertainty in terms of prices for material and labour.
“That said, the turning tide is providing an impetus for sellers who are keen to take advantage of potentially the final few months of the flurry, and sell at a record price.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Even the Rightmove survey, in common with other recent housing indices, is telling us the housing market is coming off the boil despite the average asking price of newly-listed properties reaching record territory for the fifth consecutive month.
“Rightmove’s findings have been defying reason for several months but finally affordability issues, prompted by the rising cost of living and particularly energy and interest rates, are having an impact.
“Hopefully, the change in circumstances will mean vendors set more realistic asking prices so that the level of transactions, which are important for the health of the market, can keep up as closely as possible with last year’s.”
Steve Griffiths, sales director at The Mortgage Lender:
“An economic reality of high inflation, interest rate rises, and looming expectations of a recession is the ensuing impact on house prices and market slowdown.
“Despite the fact buyer demand is continuing to push house prices upwards, it’s clear that the reality of the cost-of-living crisis is beginning to be felt.
“As the housing market cools, and UK consumer confidence further dwindles with household budgets contracting, first-time buyers and those looking to re-mortgage may feel their options diminishing when it comes to lender choice.
“For those individuals seeking lending options which suit their individual circumstances, looking beyond the high street and their own personal bank is one option to explore in order to help them realise their property ambitions.”
