Sunday, June 26, 2022

As home prices continue to rise, can first-time buyers ever make it up the real estate ladder?

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According to Rightmove, the average price for a home in May was £367,501, up from £360,101 in April

The average asking price for a property in May is £367,501, up from £360,101 in April, according to property website Rightmove.

The average home price has hit a record high for the fourth straight month, rising by £7,400 in May, according to a website.

It said it had never seen such frantic market activity in its 20 years of tracking real estate values. Average asking prices have increased by £55,551 over the past two years, compared with a £6,218 increase in the two years before the coronavirus pandemic.

The number of buyers turning to real estate agents last year was 14 percent lower than in the stamp duty-dominated holiday market of that era, but still 31 percent higher than in the more “normal” market before the 2019 pandemic.

The number of homes available for purchase is down 55 percent from 2019 levels, meaning supply and demand are likely to remain imbalanced for at least the remainder of the year, Rightmove added.

The number of agreed sales year-to-date compared to 2019 is up 12 percent, even with limited choice, but is down 17 percent compared to the “exceptional” market of the same period last year, it said.

Tim Bannister, Director of Property Science at Rightmove, said: “What the data is telling us right now is that those who are able are prioritizing their homes and moving, and the imbalance between supply and demand is supporting rising prices.

“Although demand is easing from the heady levels we saw this time last year, the number of buyers asking is still significantly higher than during the last ‘normal’ market of 2019, while the number of homes , from which to choose remains more limited.

“We expect the effects of the increased cost of living and rising interest rates to feed through to the market later in the year and a combination of an increased supply of housing and weighing people’s options will help calm the market. ”

John O’Malley, Chief Executive at Pacitti Jones in Glasgow, Scotland, said: “While hectic buyer activity has calmed down the market is definitely holding strong and we are now seeing a greater number of sellers who are more comfortable selling their property market before you bid on another.

“Pricing remains very robust with extensive offerings being made across the market.”

Aled Ellis, Director at Aled Ellis & Co in Aberystwyth, Wales, said: “The property market in our region is still buoyant despite inflationary pressures and higher interest rates.

“The trend will continue as very little is coming to market and when that is the case we agree to sell very quickly.

“Since Covid, we’re still seeing many more people being able to work from home and wanting to live in rural areas as long as broadband connectivity allows them.”

Tomer Aboody, director at property lender MT Finance, said: “With first-time buyers having to find ever larger deposits as asking prices continue to rise, the market seems worryingly further away from them. With continued significant demand for homes and buyers able and willing to put in the effort to afford them, prices continue to rise.

“As mortgage rates rise along with the cost of living, some homeowners may be looking to downsize in the near future, maximizing the value of their property while also investing equity in savings to live on. This could free up larger family homes for those moving up the ladder and help keep prices under control.’

Jeremy Leaf, a North London estate agent and former RICS Chair for Residential Property, said: “Market activity is currently being driven by a lack of inventory rather than slowing demand, despite the recent sharp rise in the cost of living and particularly interest rates.

“Rightmove’s numbers are, of course, based on asking and not selling prices, neither of which are rising as rapidly as most of last year. A delay of up to nine months in registering paid information at the land registry may explain at least part of the difference between the two.

“However, if this demand is not met, it usually fizzles out. As a result, although the lack of choice helps preserve value, transaction counts are declining, so we see no signs of an imminent correction.”

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