The UK housing market is beginning to show signs of cooling, new research has shown, as property prices reach record levels and home availability wanes.
The price of properties coming to markets rose just 0.8% last month, an increase of £2,509 ($3,483), pushing the national average to a new record high of £336,073 for the third consecutive month.
This was still the largest increase over the period since 2015.
According to data from Rightmove, house prices in the UK are now at a record in all countries and regions across Britain, which combined with an all-time low in the number of available homes, is starting to slow the pace of the market.
Although sales agreed in May were 17% ahead of the same period in 2019, it fell short of April’s 45%. The data compared current prices to 2019 since the UK property market was effectively suspended until mid-May 2020.
The research showed that average prices rose by £67,394 since March 2020 for properties in the high-end range, up 12.3% compared to a rise of 7.5% for all properties.
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The number of sales agreed on properties over £500,000 in May was 49% above the same period before the pandemic. This was despite buyers knowing that they would miss out on the stamp duty holiday, Rightmove said.
People relocating from more-expensive areas boosted prices in certain regions, with Welsh prices up by 14.6% since March 2020. Wales saw the highest jump in buyer demand, which rose 44%. Meanwhile, South West prices increased by 11.4%, with properties selling more quickly than ever recorded. This resulted in the fewest properties available for sale per estate agent of any region in England – just 10 per agent branch.
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“Since the market reopened last May in England we have seen huge jumps in the numbers of sales being agreed, but these are now rising at a slower pace,” said Tim Bannister, Rightmove’s director of property data.
“Record low interest rates and stamp duty tax reliefs have helped many to afford higher prices, satisfying their pent-up desires for a new home fit for a new era. Some of that demand has now been met, and the phasing out of stamp duty reliefs has also taken away some of the urgency to move, though our high traffic and search data indicate that there is still strong buyer demand.”
He added: “This super-charged activity cannot go on forever, but we expect the market to remain vigorous for at least the remainder of the year.”
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