Will the cost of living crisis affect house prices in Wisbech?
There is a wealth of uncertainty at the moment, and one of the major worries for households up and down the country is the impact of the cost of living crisis. Everyday essentials have risen astronomically, everything from fuel to food and energy, and therefore you may have heard a variety of different opinions on what, as a result, will happen to the property market. But before you assume that the outlook for the value of your home is going to be gloomy, there may be some light ahead in Wisbech. We ask: will the cost of living crisis affect house prices?
Where are we now?
According to the Halifax, in April the average price of UK property was up 10.8% on the same month last year, and the average cost reached a record high of £286,079, which is a result of the longest run of increases since 2016. The recent property boom was fuelled by the Covid pandemic, and the first lockdown in particular, so the housing market has defied economic conditions. It isn’t just Covid that has been driving house price growth but also low interest rates, the stamp duty holiday, and the desire to relocate and search for bigger homes with more space.
“Housing transactions and mortgage approvals remain above pre-pandemic levels, and the continued growth in new buyer inquiries suggests activity will remain heightened in the short-term. The imbalance between supply and demand persists, with an insufficient number of new properties coming on to the market to meet the needs of prospective buyers and strong competition to secure properties driving up prices,” said Russell Galley, the managing director of Halifax.
It isn’t just the cost of living that is squeezing household budgets but also mortgage rates. The gap between house prices and earnings continues to widen, reports the Office of National Statistics (ONS). With the average cost of a home in England rising from 2020 that saw 7.9 times earnings to an average of 9.1 times earnings. As a result, home buyers are struggling to find larger deposits, thus forcing many into staying in long-term rentals. Nationwide reports that seven in 10 have now put their plans on hold for at least two years.
Where are we headed?
Things have started to slow, which is confirmed by the Halifax’s monthly property index which states the rate of growth in April is down from March. “Even though there is a lot of caution about the future economic landscape, it seems that limited supply available on the market, coupled with steady demand growth, are still the overriding drivers of house prices,” suggests the latest RICS Residential Market Survey.
Despite this increasing financial tightening, industry experts still believe that we are not headed for a crash. Here in Wisbech, we believe that we are not expecting house prices to fall, but we do think that the rate of growth will start to stagnate. Russell Galley, the managing director of Halifax states: “The headwinds facing the wider economy cannot be ignored. With interest rates on the rise and inflation further squeezing household budgets, it remains likely that the rate of house price growth will slow by the end of this year.”
There is no doubt that your finances are under pressure this year, and one thing that we know from the last couple of years is it’s hard predict. Rightmove’s Tim Bannister commented: “With so many variables affecting house prices and affordability, it’s a reminder that the market is extremely difficult to predict, and those looking to buy will be prioritising their own needs and what they can afford rather than waiting to try and time the market.”
Where to be
We understand that you may have specific questions related to your home and personal circumstances. Our team are always available – call 01945 588111 or email firstname.lastname@example.org