The ‘meteoric rate of house price growth simply isn’t sustainable’
07-19-2021
MARC DA SILVA
The widening supply-demand imbalance continues to place upward press on property prices, as reflected by the latest asking price data published this morning.
The average price of property coming on to the market is up 6.7% in just six months, and yet there could be more room for growth, according to some agents.
James Forrester, managing director of Barrows and Forrester, commented: “The availability of stock on the market is the lifeblood of the property market and if it’s significantly short in volume.
“As a result, we can expect to see prices soar ever skyward as demand continues to outstrip supply, regardless of the fact that the stamp duty bonanza may have finished.”
But now that the support from the temporary stamp duty relief has all but ended, the market is likely to slow, according to the founder and CEO of GetAgent.co.uk, Colby Short.
He commented: “The time it’s taking to sell a home has plummeted to just 38 days in June, an all-time low. However, it’s important to note that this is the time it’s taking to agree a sale, not complete it, and sizable delays remain at the final stage of the transaction timeline.
Short added: “We will inevitably see the market return to normality with demand diluting somewhat, price growth softening and time-to-sell increasing back to 45 to 50 days.”
Marc von Grundherr, director of Benham and Reeves, is not convinced that that housing market boom has run out of steam.
He said: “The UK property market continues to defy expectation, with house prices reaching yet another record high despite whispers of a decline in values as a result of the tapered stamp duty holiday deadline.
“There’s no doubt the stamp duty holiday has been the catalyst for this impressive market performance. However, it isn’t the driving factor behind the intent to purchase for UK homebuyers and so a robust level of activity will remain long after it has expired.
“When you couple heightened demand with a severe shortage of stock, it’s very likely that property values will remain buoyant for the remainder of the year, at the very least.”
However, Matthew Cooper, founder and managing director of Yes Homebuyers, is clear in his mind that the current rate of house price growth is not sustainable.
Cooper said: “History tells us that such a meteoric rate of house price growth simply isn’t sustainable. The past 12 months or so may well have been good for the property industry and for sentiment overall however caution now prevails as we enter a second year of wildly increasing property values – a bubble if ever there was.
“The spectre of higher inflation and the Bank of England potentially responding with the blunt instrument of an increase in interest rate rather adds to the peril.”