House prices up £55k since Covid pandemic
Asking values leapt by £7,400 between April and May alone, according to data from property website Rightmove.
By comparison, average prices increased by £6,218 in the two years prior to the pandemic.
A typical home now has an asking price of £367,501 nationally, the fourth consecutive month of record highs.
The past two years of red-hot price growth hasn’t been witnessed in more than 20 years of tracking values, Rightmove said.
Properties available to buy are 55% down on levels seen in 2019, meaning demand continues to outstrip supply.
A cooling yet imbalanced market
However, the site found signs the market is starting to cool.
The number of buyers contacting agents is down 14% compared to last year, though it remains almost a third above 2019 levels.
Sales are down 17% year-on-year, but again are almost 20% above 2019.
Tim Bannister, Rightmove’s director of property science, said: “People may be wondering why the housing market is seemingly running in the opposite direction to the wider economy at the moment.
“What the data is showing us right now is that those who have the ability to do so are prioritising their home and moving, and the imbalance between supply and demand is supporting rising prices.
“Though demand is softening from the heady levels we saw this time last year, the number of buyers enquiring is still significantly higher than during the last ‘normal’ market of 2019, while the number of homes for them to choose from remains more constrained.
“We anticipate that the effects of the increased cost of living and rising interest rates will filter through to the market later in the year, and a combination of more supply of homes and people weighing up what they can afford will help to moderate the market.”
Prices running away from first-time buyers
Tomer Aboody, director of property lender MT Finance, said: “With first-time buyers needing to find ever-bigger deposits as asking prices continue to rise, worryingly the market seems to be running further away from them. With continued significant demand for homes and buyers who are able, and willing, to stretch themselves to afford them, prices are still on the rise.
“As mortgage rates increase along with the cost of living, some homeowners may potentially look to downsize in the near future, maximising their property’s value while banking the equity for savings that they can live off.
“This could free up larger family homes for those moving up the ladder, helping keep prices in check.”
Monthly mortgage payments £14 higher than rent
The property portal site found that average monthly mortgage payments of £901 are higher than rent payments at £887. However, years of low interest rates make mortgage payments only 11% higher than 10 years ago, compared to an average increase of 40% for rent.
However, a single first-time buyer needs a deposit that is 112% higher than a decade ago, thanks to rising prices.
Bannister added: “This new analysis shows how it has become increasingly difficult for an average first-time buyer to afford a home on their own. The historic average mortgage payments for a first home provide some good context to the current backdrop of rising interest rates and help explain why so many people take out fixed-rate mortgages.”