Inflation rates have soared as of late with further expected increases over the coming months. Currently on track of passing the 10% mark, the rates are one of the Bank of England’s top priorities, as they hope to contain it.
How does the rising inflation effect the housing market?
Still growing from the pandemic, house prices are rising consistently, with even the lowest percentage increase still bolstering an impress 4.8% annual growth, coming from an average property price of £523,666 in London.
So, thankfully, it isn’t as damaging as it may seem. 10% is a rate that has persisted in the property market for prolonged periods of time without effect, and as of late, the official figures show property prices jumping to 9.9% in the year to March.
With house prices soaring, it is reasonable to wonder why this is happening at a time where the cost of living has significantly increased- Nick Leeming, chairman of estate agents Jackson-Stops explains:
“We may see the cooling effects come into play more in the coming months, but significantly, unlike other periods of high inflation, it is the sustained demand from homebuyers that will continue to press house prices upwards in the short term in spite of macro-economic headwinds…”
Simply put, the housing market is primarily in the sellers’ hands as of now. It is a known quantity that buyers are wanting to leave large cities and invest in rural property that has both well connected transportation and a replication of city living amenities. This would explain the increasing house prices in commuter towns such as Stockport and Liverpool. Fortunately, because of this, the demand for property outweighs the rise of inflation, creating these steady price increases and stable market.
This has been seen to happen throughout the country, as even in London, Jeremy Leaf, north London estate agent, has commented: “Market activity at present is determined more by a shortage of stock than a softening in demand despite recent sharp increases in the cost of living and especially interest rates.”
If investors are wondering whether or not it is the right time to buy into the property market, it is heavily recommended. With the ever-increasing prices and constant demand, the current year to date is replicating that of previous years with a guaranteed stable income.