House market may be ‘as good as it gets for a while’

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Double-digit house price rises in May are the startlingly high, but this could be as good as it gets for a while, investment advice firm Hargreaves Lansdown has suggested.

‘We’re not expecting precipitous falls, but rises are unlikely to be as steep in the coming months’, said personal finance analyst Sarah Coles.

‘Many of the property sales completing by the end of May are likely to have been agreed at the start of March – when Rishi Sunak confirmed the stamp duty extension in the Budget.

‘It was then buyers bounced back into the market, but sellers were more cautious. The number of properties sold during May were fewer than last year,  but a shortage of properties on the books meant that those which did sell went for higher prices’.

According to Hargreaves Lansdown commercial indices for June suggest strong annual price growth but that this may fall back as month-on-month price rises are either slowing or dropping. With the stamp duty holiday having tapered off at the end of June, the pace of price increase may slow.

‘This doesn’t mean we’re due falls’, said Coles. ‘A shortage of properties for sale combined with record low mortgage rates should provide a floor under prices.

‘It usually takes a shock to the system to upset the housing market: like interest rates rises, unemployment or recession. None of these are forecast to be a major problem for the next few years’.