Spring house price falls could signal end of market frenzy

Based on deals agreed between buyers and sellers in the run up to Christmas and over the new year period, house prices are expected to rise by 0.2% in February before falling by 0.9% in March and a further 0.8% in April.

Homebuyer activity at the start of the year has been strong, according to Rightmove and Zoopla, with record numbers of valuation requests and property searches suggesting the pandemic-driven ‘race for space’ continues to play out, yet it remains to be seen how much of this early home mover activity translates through to sales.
Reallymoving believes that rising interest rates and concerns about inflation and the growing cost of living may already be having an impact on consumer sentiment.

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 it to provide a three-month house price forecast.

Rob Houghton, CEO of Reallymoving, commented: “Falls in the average house price in March and April could indicate the beginning of a slowdown in the property market, but the rate of growth we’ve seen since the summer of 2020 couldn’t continue indefinitely and a return to a more stable footing would be good news for first-time buyers in particular.

“While growth in earnings fails to keep pace with the cost of living, worries about the inevitable squeeze on household finances will make some people think twice about moving and reluctant to take on more debt, which is why the shortage of homes for sale across the board could be an ongoing problem in 2022 – especially considering many of the people who would have sold this year brought their move forward to benefit from the stamp duty saving. Much will depend on the volume of new listings we see hitting the market this spring and the speed at which lenders push up the cost of fixed rate deals.”