Supply and demand is giving strength to the housing market for now but those who rent face misery

Lack of supply is shoring up house prices for now but those who rent face misery

The average price of property coming to market hit a new record high this month after a 9.3 per cent year-on-year rise taking the average house price to £369,968, according to Rightmove.

Yorkshire saw a 12.1 per cent annual increase taking the average house price in the region to £243,632.

The property portal points out that many first-time buyers now face the twin struggle of higher house prices and rising interest rates, meaning that their monthly mortgage payments are now likely to be 20 per cent more expensive than at the start of the year.

The housng market is holding up amid a lack of supply

Rightmove analysts add that while the continuing desire to move and low numbers of homes for sale are driving price growth, there are signs that the seriously depleted stock situation is improving. The number of sellers is up by 13 per cent compared with this time last year, though the number of available homes for sale is still 40 per cent lower than in 2019.

“Having more new sellers this month is a win-win for the market, as they will likely achieve good prices for their homes given the sixth asking price record in a row,” says Rightmove director of property science Tim Bannister, who adds that while a softening in demand is moving the market from a boil to a simmer, it remains 26 per cent up on 2019.

He says: “With such an imbalance remaining between supply and demand, prices look underpinned, and we would therefore only expect typical smaller seasonal month-on-month falls, rather than more significant price falls in the second half of the year. This has led to us revising our annual price growth prediction for the end of the year from five per cent growth to seven per cent, although this would still mark a slowing from the 9.3 per cent seen this month.”

He adds: “The challenges presented by rising interest rates and the cost of living will no doubt have an effect throughout the second half of the year, as some people reconsider what they can afford. However, there is also anticipation among would-be home-movers that personal finances may become even more stretched in the coming months, with further interest rate rises expected and the energy price cap jumping again in October.

“Given the political and economic uncertainty at the moment, those who want to move this year, particularly first-time buyers, may seek some financial certainty by locking in longer fixed-rate mortgage terms now before their monthly outgoings increase again.”

While house prices and activity are stabilising in some areas of Yorkshire, the hotspots are still on fire. Ben Hudson, managing director of Hudson Moody estate agents in York, says: “The shift to home working since Covid has meant that a steady flow of buyers from London have relocated to York due to its connectivity.

“This first half of the year has seen many properties going to best and final offers, often achieving considerably more than their asking price due to the level of buyer demand.

“Yorkshire is still significantly cheaper than the South East and this is driving prices upwards.

“We expect to see a busy Autumn in York with continued interest from London and the South East, despite interest rates continuing to rise from their historic lows.”

Patrick McCutcheon, head of residential at Dacre, Son & Hartley, which has 21 offices in West and North Yorkshire, says: “The lack of property for sale and high buyer demand have been key features of the market for the past two years and have reinforced prices.

“Another factor which is helping to drive price growth in Yorkshire is the high number of buyers that are still relocating from London and the South East. Although our stock levels have significantly improved, and we currently have almost 50 per cent more properties, either for sale or under offer, than this time last year, there are still more buyers than sellers in the market.

“As a result, and despite concerns about interest rates and inflation, now is a good time to sell. There is demand in Yorkshire for all types of homes and particularly high quality family houses in good locations.”

Royal Institution of Chartered Surveyors Chief Economist, Simon Rubinsohn, says that pricing across much of the housing market remains resilient for now with a shortage of stock continuing to be a feature of the market.

However, there is concern for the rental market. He says:“A more striking aspect of the latest RICS report is the concern about the rental market. “A lack of social housing development and onerous changes in the private lettings market is exacerbating the imbalance between demand and supply leaving the rent expectations metric pointing to further strong growth in the midst of the worsening cost of living crisis.”