According to Rightmove, average asking prices for properties have risen by £55,000 over the past two years compared to the pre-pandemic increase of £6,000. House prices have been at record highs for four months in a row now and as inflation hits a 40-year high of 9%, the Bank of England has hiked interest rates to try to head off a possible impending recession. While it may seem like we’re headed for an increasingly downward spiral, that shouldn’t be the case for house prices.
The average asking price for a property in the UK now stands at £367,501, up 2.1% from last month.
This four-month price record coincides with the fourth consecutive increase in interest rates. However, this rise in rates does not seem to have a negative impact on the desire of the British to move.
Research from Rightmove shows that the number of buyers contacting estate agents during the month is 31% higher than the more normal market in 2019, and sales are up 12% compared to the same period in 2019.
However, there are signs that the housing market is beginning to ease, which will no doubt have a ripple effect on asking prices.
Although the market is more active compared to that of 2019; Analyzing the period between now and the stamp duty fueled market of this time last year, those contacting real estate agents are actually down 14% and sales are down 17%.
READ MORE: Record house prices up £7,400 in a month, says Rightmove
Properties available for purchase are also down 55% from what was available in 2019, meaning supply and demand will likely be out of sync for the rest of the year.
These figures could indicate that there is not necessarily a lack of desire to buy, but rather a lack of houses for sale. A finding that might seem at odds with the current UK cost of living crisis, but also one that could prevent prices from rising further.
Why might average selling prices soon stop rising?
Tim Bannister, director of real estate science at Rightmove, said: “People may be wondering why the housing market seems to be running in the opposite direction to the broader economy at the moment.
“What the data is showing us right now is that those who have the capacity are prioritizing their home and moving, and the imbalance between supply and demand is supporting higher prices.
“Although demand is declining from the dizzying levels we saw at this time last year, the number of buyers requesting information is still significantly higher than during the last ‘normal’ market of 2019, while the number of houses to choose from remains more limited.
“We expect the effects of the rising cost of living and rising interest rates to ripple through the market later in the year, and a combination of increased supply of homes and people weighing what they can afford will help moderate the market. ”
If you are considering or are saving your pennies to take advantage of a possible plateau or decline in real estate prices, there are several ways to maximize the funds.
James Andrews, personal finance editor at money.co.uk, shared his tips for saving for a deposit.
How to save for a house deposit
Mr Andrews said: “With many of us already exhausted by rising rents and the cost of living crisis, anyone looking to buy their first home will need to put in some serious financial planning to pay a deposit.”
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The first step for anyone hoping to put down a deposit is to figure out how much you need to have saved to afford a home.
Mr Andrews said: “This figure is based on two factors – the value of the property you intend to buy and the amount lenders are willing to offer you as a mortgage. Subtract one from the other and you have your savings goal.
“But it’s important to remember that the higher the percentage of a home you have saved, the cheaper the mortgage rate you could be offered.”
For example, if your savings cover 20% of the purchase price of a home, you will likely pay a lower interest rate on your mortgage than someone whose savings only cover 10%.
Mr Andrews continued: “Once you have an approximate cost for your deposit, you can start budgeting your finances. Make a list of all your regular expenses, from there you can find all the areas where you can cut back, allowing you to maximize your savings.
“It’s also crucial that you put your saved money in a separate account, just to keep track of how much you’re saving and also to avoid unnecessary spending.
“Some accounts will come with bonuses to help you save even faster. For example, the Lifetime ISA (LISA) entitles you to a 25% bonus on savings up to £4,000 a year if you use them to buy your first home, which means you can earn an extra £1,000 on top of your savings and interest.
In addition to Lifetime ISAs, there are a number of government programs such as Home Ownership and Home Equity Loans that can help you get onto the homeownership ladder faster.
Mr Andrews said: “Before deciding what type of property you are interested in, check which schemes you are eligible for as this may limit your options. For example, with the government’s purchase assistance program, you will only be able to access the loan if you buy a new house or apartment.
“Finally, if you are currently renting, consider temporarily finding a cheaper room or moving home to live with your family if you can.
“Doing this for a period of six to 12 months can really increase the rate you can save – however, it’s not necessarily available to everyone.
“If you stick to your budget and play smart with your savings, this dream home could be yours.”