The property market is undoubtedly experiencing a prolonged frenzy of activity which has driven UK property prices to a record high this month. Online property portal Rightmove said the average asking price jumped by 2.1% in April to a new all-time high of £327,797 – an increase of £6,733 from March. The number of sales agreed is up by 55% on the same period two years ago, reducing the stock of properties that are available to buy to the lowest proportion ever recorded. 145,000 properties were newly marketed this month, but Rightmove says this is still not enough to meet buyer demand.
As we have said before, this activity has been largely driven by a shortage of houses on the market. The coronavirus pandemic is driving many families to search for properties with extra space and away from inner city locations, as more people make a more permanent move to working from home.
But as the old saying goes, what goes up must come down, right? Well, at least that is what has historically happened in the housing market over the years. But this bubble is different and I, like many other property professionals, am starting to think that, whilst there could be a slight softening in prices when the stamp duty holiday comes to an end, this is not a bubble that is going to just burst any time soon. But how can it continue, I hear you ask.
The housing market is not what it used to be and with the pandemic crisis seeing interest rates slashed last year to yet another all-time low, prices are being steadily inflated.
The US Federal Reserve sets the tone for other central banks and is telling financial markets that ultra-low interest rates could be with us for years. Look at Europe as an example – The eurozone base rate is now -1%, so mortgage rates in the UK could still go lower if required. House prices are rising but wages are not, so affordability is all based around rates.
With worldwide economies extremely fragile, this would not be the time to start raising interest rates. So it would seem that this new era of cheap money could be with us for some time to come. If you combine low-borrowing costs with first-time buyer incentives, such as the new 95% mortgage guarantee scheme and building grants, it is possible that property prices will keep rising despite the coronavirus recession.
Of course, whilst this is great news for sellers, it has also created a very competitive and highly charged market. Sellers are often overwhelmed by the number of viewers wanting to visit their property and underhand tactics by agents to achieve the highest fee. There is no quietly and discreetly slipping your property on the market these days, agents are fighting for every instruction so social media has become a big part of their overt marketing tactics.
Perhaps you want or need to sell your home but don’t want the fanfare that comes with the current market climate? If you would like to know how much WeBuyProperty would offer you for cash, without having to take your property to the open market, we will give you a no obligation valuation. We can also transact within a matter of weeks.
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