Over the next few months, the property market is set to see a spike in house prices, but it won’t last long, according to new forecasts.
What has driven prices up?
Following the slowdown in the market during May and June, prices stand at a record high, banks claim. The current rise is attributed to a number of factors. The pent-up demand from lockdown being released, combined with the added incentive of the stamp duty holiday, has stimulated a mini property boom.
One other important contributing factor is a shift in behaviour. Lockdown has caused people to reassess what they need from their home. Buyers want more space, and gardens are high on the priority list.
All of these factors lead to increased activity, with buyers competing for available property driving up prices. For those wanting to take advantage of the stamp duty holiday, efficient conveyancing and competitive conveyancing fees are a must. Sites such as SAM Conveyancing also offer fixed conveyancing fees.
How high will prices rise?
Average house prices in England and Wales are set to increase 8.1% between June and October from £308,280 to £333,331. Conveyancing sites claim that on a month by month basis, the value of sales agreed between buyers and vendors in June will demonstrate a 6% growth when they complete in September, and 6.1% in October.
It is believed that annual house price growth will fall by 1.4% in August, the first fall since the summer 2019. However, it’s believed it will bounce back by 4.7% in September and 11.3% in October, reaching a record high.
Where do prices go from there?
Experts also predict that this record high could be short-lived. With the furlough scheme coming to an end in October, there is likely to be an acute rise in unemployment. Coupled with a No Deal Brexit and the UK officially being in recession, the outlook is uncertain. Thousands of homeowners who took mortgage holidays will recommence payments in October and could find themselves strained financially, while first-time buyers may struggle to secure a mortgage at all as lenders make their loan criteria stricter.
It is likely this will serve to dampen market activity in the next quarters, with house price falls forecast into next year. The Resolution Foundation think tank warns these predictions could lead to homeowners becoming trapped by negative equity.