A relative shortage of homes for sale is creating competition among buyers in the UK and sustaining upward pressure on house prices. As a result, the majority of the Royal Institutional of Chartered Surveyors (RICS) members think house prices in the UK will continue to rise over the next 12 months.
So with house prices showing no signs of relenting, is it time for buyers to consider putting their house hunt on hold?
What’s happening to house prices?
According to the survey by RICS, a net balance of +68% of its members reported an increase in house prices.
Although this is a fall from the recent high of +82% recorded in May, ‘it remains elevated in a historical context nevertheless’ according to RICS.
Fuelling the continued house price increase is an imbalance between supply and demand.
The stats show that September’s new instructions net balance registered a figure of -35% (compared to -36%) last month. This figure has now been in negative territory in each of the last six months.
In addition, respondents also report a reduction in the number of appraisals undertaken in September, from -10% in August to -26%.
What does the future hold for house prices?
According to RICS members, the decline in the number of new home listings coming onto the market is not likely to subside any time soon. This is consequently likely to continue to push house prices up.
In fact, a net balance of +21% of respondents anticipate an increase in house prices over the next three months. Meanwhile, a balance of +70% of respondents foresee further price growth over the next 12 months.
Should buyers back off from the current market?
Many buyers are being priced out of the current market, and those who are buying are being forced to pay a premium for their new houses.
Until more properties come onto the market, buyers are likely to continue facing record-high home prices and intense competition.
Naturally, if you are in the market for a new home, you might be wondering whether it actually makes sense to continue with your search or whether it would be best to put your plans on hold until things improve.
For a lot of people, backing off could actually make a lot of sense.
For example, if you’ve been trying to buy a home for the last few months but haven’t been able to find one within your budget, or if you keep getting outbid by other buyers, it may be time to rethink your plans.
Once there are more properties on the market, there will be less competition and house prices should slowly but surely start to come down. You’ll also have more options, translating to a better chance of finding a home with all the features you desire.
In addition, waiting could also allow you to save more money for a deposit. This will ultimately give you more purchasing power down the line, even if prices don’t drop by much.
What if you don’t want to wait?
Needless to say, backing off from the market, especially if you’ve been looking forward to purchasing a new house for a long time, is never easy. In that situation, there is nothing wrong with continuing your search.
You never know when you’ll come across a home that ticks all of your boxes, including price. You might even be fortunate enough to snag it before other buyers enter the fray.
Furthermore, buying now might allow you to take advantage of today’s ultra-low mortgage rates, especially if you can afford a bigger deposit.
Ultimately, you’ll need to assess your personal circumstances to determine whether it’s better to continue your search or to wait until more properties for sale become available.
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