Fewer people are putting their houses up for sale, meaning property prices are being pushed ever higher, according to a new report.
The Royal Institution of Chartered Surveyors (RICS) says that there aren’t as many people putting their houses up for sale and this number is currently falling at the fastest rate since May 2009. Meanwhile, the number of people looking to buy houses hasn’t changed, contributing to a rise in property prices.
Lack of supply
It’s simply supply and demand – with fewer houses on the market but the same number of people wanting to buy a home, it makes sense that these popular properties will start to become more expensive. Most of the RICS members in the report say that they expect this trend to continue over the next year, meaning we could see house prices rising further still.
Fewer people wanting to sell but no decline in the numbers wanting to buy indicates that new buyers are coming into the market looking to buy for the first time.
Mortgage arrears down
It’s not all bad news though. It seems that homeowners are managing their mortgages better. The number of people in mortgage arrears and the number who had their houses repossessed have fallen, according to new stats from the Council of Mortgage Lenders (CML). 3,100 properties were repossessed in the first quarter of this year, the lowest figure since records began in early 2008. There were 113,900 mortgage loans in arrears, a slight fall from the previous quarter.
Reports say these figures could be slightly skewed due to a legal wrangle with the Bank of Scotland in Northern Ireland, and the numbers might rise again in the second and third quarters of 2015. But on the whole, the picture looks good for borrowers and it seems that the record low-interest rate that’s been in place since 2009 is helping people to manage the cost of their borrowing.
Thinking of moving?
So what does this mean for you if you’re looking to move house? The good news is that interest rates remain at an historic low – which means it’s possible to find some very attractive mortgage deals. But remember that interest rates are predicted to start rising next year.
If you are a home mover rising prices don’t really make a difference – you might get more for the house you are selling – but you’ll pay more for the one you are buying too.
Property prices starting to rise doesn’t help first-time buyers at all though, as it makes it increasingly hard to save for the deposit and to borrow enough to get your foot on the first rung of the property ladder. You might have to look at houses slightly smaller than you wanted to, in slightly different areas, or save for longer. What’s really needed is an increase in the number of new houses – particularly affordable homes - being built.
If you’re a first-time buyer and you’re trying to get on the property ladder, check out our guide to beat generation rent for more advice about how you could take that first step.
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