It appears house prices are unlikely to fall any time soon. In fact, the slowdown in July was only a temporary break resulting from the end of the Stamp Duty holiday. Somewhat surprisingly, demand continues to increase despite rising house prices. It’s becoming clear that house prices are not the main factor influencing whether or not buyers purchase properties. So what is influencing them? And what’s the current house price forecast for October 2021?
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Why is demand for housing still increasing in the UK?
The pandemic affected the housing market severely. As a result, the government had to step in with several schemes to help buyers. These schemes, coupled with buyers reassessing their housing needs, new working arrangements and low mortgage rates have continued to fuel housing demand.
Government schemes have presented new opportunities for buyers. First-time buyers can now more comfortably afford homes, which has resulted in a massive influx of buyers looking to take their first step on the property ladder.
Additionally, the Bank of England’s Monetary Policy Committee (MPC) has voted unanimously to maintain the 0.1% rate. This is good news for buyers as mortgage rates will remain low, further fuelling demand.
Why are house prices increasing in the UK?
The main factor driving house prices through the roof is the imbalance between supply and demand. Demand for housing is increasing and the number of new homes coming onto the market is too low.
It’s also becoming evident that the end of the Stamp Duty holiday has not significantly impacted house prices. Factors like low mortgage rates, government housing incentives and buyers’ need for space continue to fuel demand, pushing prices ever higher.
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What’s the current house price forecast?
House price forecast data from home moving services provider Reallymoving reveals that house prices are set to increase by 1.7% in October.
Reallymoving takes the purchase price buyers have agreed to pay as they search for conveyancing quotes through its comparison site. Registrations for these conveyancing quotes are usually completed three months before the transaction date. This makes it possible for Reallymoving to forecast house prices.
Additionally, since many customers may be skewed towards lower-priced houses, Reallymoving needs to account for errors. It does this by lifting the average difference observed between its data and prices from the Land Registry during the previous quarter.
Traditionally, autumn and winter are seen as a good time to buy a house. As a result, we can expect more buyers to enter the market, especially those who hesitated during the first three quarters of the year. This will only cause a further increase in house prices.
Let’s also not forget that we’re in the last stages of recovering from the pandemic, meaning the return of some normality. Reallymoving has already seen a 14% increase in the number of sellers coming to market in September. This trend may continue through the winter.
Should I buy a house this winter?
The best time to buy a house is always when it suits your personal circumstances to do so. Consider your financial situation first to make sure you can comfortably afford the house you want to buy.
That said, Q4 might be a good time to buy, especially if your finances allow you to do so. On the one hand, mortgage rates are at an all-time low, there are plenty of government incentives and housing supply is rising gradually. On the other, the Bank of England may increase its base rate if inflation continues to rise. If it does, mortgage rates could increase, making a mortgage more expensive if you delay your purchase.
Before you take the plunge, it’s always wise to carry out your due diligence and talk to a financial adviser.
