Given that demand for homes is said to be cooling off, a lot of people believe that house prices will start to slow down, and possibly even fall.
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Some experts believe house prices will rise further
Sarah Coles is a personal finance analyst at Hargreaves Lansdown believes property prices will continue to rise, even if there is an increase in interest rates later on in 2021 or in 2022.
Sarah said; “Most of the value of the stamp duty holiday was lost at the end of June, so we saw a big surge in average prices in June as people rushed for the deadline and pushed prices up. After this passed, the market took a breath, and prices dropped back slightly in July. Then, in August, the final stamp duty holiday deadline started exerting an influence. And while people could save far less at this point, there was still the psychological effect of the final deadline at the end of September urging them on. Price rises bounced back in August, and there’s every sign they’ll remain strong in September too.”
A rise in interest rates will be something which affects the market, but hopefully not by too much. Sarah also said; “The banks are currently prepared to increase their exposure to risk in a way they would be wary of, if they thought prices would fall. So, for example, HSBC has increased limits on how much wealthy buyers can borrow. Those with incomes of £75,000 or more can now borrow five and a half times their income – up from five times – and there’s every chance other banks will follow suit.”
The market is currently robust
Nationwide suggests, in their most recently published guides, that property prices have increased by 0.7% on a month-on-month basis. The non-seasonally adjusted average price of property stands at £250,311. Annual house price growth was 10% in September 2021, but for October 2021, the figure stands at 9.9%, so there has been a minimal reduction.
Robert Gardner, Nationwide’s Chief Economist, said: “Annual house price growth remained elevated in October at 9.9%, albeit marginally lower than the 10.0% recorded in September. Prices rose 0.7% in month-on-month terms, after taking account of seasonal effects. The price of a typical UK home has now passed the £250,000 mark, an increase of £30,728 since the pandemic struck in March 2020. Demand for homes has remained strong, despite the expiry of the stamp duty holiday at the end of September. Indeed, mortgage applications remained robust at 72,645 in September, more than 10% above the monthly average recorded in 2019. Combined with a lack of homes on the market, this helps to explain why price growth has remained robust.”
At Williams of Petersfield, we aim to support the Petersfield community as much as we can, and we know this is an extremely trying time. A lot of people are looking for support and guidance, and if you have any property or housing related questions, we are more than happy to assist you, so contact us today.