Why are UK house prices going up?

Why are UK house prices going up?
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The first half of 2021 saw a buyer frenzy in the housing market that pushed average house prices to a new record high. According to estate agent Rightmove, 2021 has had the busiest ever first half of the year. It saw 140,000 more sales agreed.

However, there were 85,000 fewer new listings than the long-term average. Rightmove’s figures reveal that this resulted in a shortfall of 225,000 homes for sale. We take a look at why house prices are still rising.

Why are house prices still rising?

When the government announced the stamp duty holiday to support the housing market, demand for new homes soared. The low cost of borrowing also fuelled increased demand.

Rightmove highlights that the average number of available homes for sale per estate agency branch is currently at a record low of 16 properties. Last year, each branch had an average low of 25 properties. This was still some way short of the long-term low of 31 properties.

The number of homes available for sale is still low, which has led to a continuous rise in house prices.

Will house prices fall in 2021 UK?

It’s difficult to predict the future, but experts believe that house prices could fall in the second half of the year. However, some things might need to happen for this to occur.

The government may need to meet its building target. This could help to correct the imbalance between supply and demand and contribute to lower house prices.

The coronavirus pandemic has brought a focus on the need for indoor and outdoor space. People are seeking more space to work from home and larger gardens as the urge to stay at home has grown.

Rightmove highlights that homes with 4 or more bedrooms saw a 39% surge in sales, but a 15% drop in supply, which resulted in an average house price hike of 6.7%. New houses need to meet these needs to keep house prices low.

Is now a good time to buy a house in the UK?

The best time to buy a house is when you’re in great financial shape and have clear motives to move. If you’re in a strong financial position, the house you want to buy is available and you don’t plan to move again for a considerable time, current market conditions may not prove a key factor in your decision.

Currently, it appears the supply of houses is not meeting demand, meaning house prices could continue to rise. This means there’s a risk of purchasing a house and then discovering that your home is worth less than you bought it for.

If you overstretch your finances to fund the move and plan to move again in the short term, this could be a challenging situation. But if the move is within your means and you’re in it for the long term, there may be no reason to delay a move.

Whether to hold off on buying or make a move might require you to act with a bigger financial mentality. It might be wise to seek guidance or assistance from financial advisers to avoid making regrettable mistakes.

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