House prices rose again this month, bringing the UK’s average house price to a new record high, however there are early signs the market is starting to slow down.
House prices rose £2,509 this month, a relatively modest rise 0.8 per cent, pushing house prices to a new record high of £336,073.
June’s rise was significantly smaller than May’s 1.8 per cent increase, or April’s 2.1 per cent, which RightMove said indicates an early sign the current hectic housing market is slowing.
With that said, this month’s price rise marked the largest June price increase since the summer of 2015.
The South West and the East of England saw the largest price rises, up two per cent each, followed by London, which saw price rises of 1.5 per cent to an average of £650,294.
The North West saw the smallest rises, with prices up just 0.2 per cent to £223,824.
Tim Bannister, Rightmove’s director of property data, said: “Buyer demand remains very strong, though with an all-time low in the number of properties available for sale on estate agents’ books and new stock at higher than ever average prices, there are early signs of a slowing in the frenetic pace.”
Demand outstrips supply
Since the introduction of the stamp duty holiday last summer, house prices have rocketed, as buyers sought to avoid tax.
Buyer demand has continued to outstrip supply, and the market’s size is constrained until supply picks up again.
According to RightMove’s figures, the number of sales agreed by estate agents in May was 17 per cent ahead of the comparable period of 2019, a slackening of the pace recorded in April when sales agreed were 45 per cent higher than in April 2019.
Bannister continued: “Since the market re-opened last May in England we have seen huge jumps in the numbers of sales being agreed, but these are now rising at a slower pace.
“Record low interest rates and stamp duty tax reliefs have helped many to afford higher prices, satisfying their pent-up desires for a new home fit for a new era.
“Some of that demand has now been met, and the phasing out of stamp duty reliefs has also taken away some of the urgency to move, though our high traffic and search data indicate that there is still strong buyer demand.”
However, he said higher prices, combined with a lack of fresh choice coming to markets are reducing some buyers’ ability or desire to move.
“While we expect the market to remain robust, there are early signs of a slackening in the incredible pace of activity that we’ve seen over the last year,” he added.
Market ‘groaning under pressure’
Yes Homebuyers founder and managing director Matthew Cooper said: “Property stock is evaporating at an alarming rate due to huge levels of buyer demand and this severe imbalance is causing an artificial property price boom.
“Great for sellers who can justify overpricing their home but not so great for the wider market that is already groaning under the pressure.”
James Forrester, MD of Barrows and Forrester, said sellers and agents have never had it so good, adding: “Not only are transactions climbing along with house prices, but the speed at which properties are selling is extremely fast.
“Just 41 days to sell a home is close to an all-time best and means that at some extremes, listings have been selling before the ink is dry on the sales particulars.”