House prices to continue climbing through spring: reallymoving

The imbalance between supply and demand will continue to drive prices upwards through the spring despite growing pressures on household finances and rising borrowing costs, according to the reallymoving House Price Forecast.

Its research found that the supply crunch, which has seen the volume of properties for sale plummet to record lows, combined with unseasonably strong buyer demand, is preventing sale prices from falling, as would normally be expected when households experience sudden financial pressure.

Reallymoving captures the purchase price buyers have agreed to pay when they search for conveyancing quotes through the comparison site, typically 12 weeks before they complete, enabling reallymoving to provide a three month house price forecast.

Large increases of 4.7% in April and 6.0% in May are predicted, followed by a smaller rise of 1.3% in June.

However reallymoving says reports from mortgage brokers of an increase in down-valuations suggests there’s a growing mismatch between what buyers are prepared to pay to secure a property against stiff competition and what lenders are prepared to lend based on their own valuations, which could signal a turning point for the market.

With a base rate rise to 0.75% in March, making mortgages more expensive at a time when household finances are already stretched, the current run of house price growth is likely to slow later this year.

Rob Houghton, CEO of reallymoving, commented: “House price forecasts for the coming quarter suggest we’re heading into a period of strong price growth, but when taken in the wider context what we’re actually seeing are prices being inflated by a severe supply squeeze. This is forcing the market upwards, masking the impact of inflation and rising costs on household budgets which we would normally expect to rein in price growth.

“Having less money in their pockets will ultimately deter people from taking on more debt as they move up the ladder, and at some point in the near future this will slow house price growth. Much will depend on the volume of new listings we see coming onto the market and the speed at which lenders push up the price of fixed rate mortgages.”