LONDON – Inquiry prices for homes in Britain rose again in May, driven by a lack of new homes on the market rather than strong demand, which is set to fade as the cost of living intensifies, a survey found on Monday.
Property search website Writemove said the asking price for properties sold between mid-April and mid-May rose 2.1% after rising 1.6% in the previous month. This marked the largest May increase since 2014.
Compared to a year ago, the asking price is 10.2% higher. The survey season is not adjusted.
The report echoes other measures that show that the UK housing market retained much of its momentum in the first half of 2022, despite the temporary tax break on property purchases being phased out in the second half of 2021.
But with high inflation and tax hikes squeezing household budgets, Wrightmove was skeptical about whether the housing market would be able to hold on to its recent strength – although there are now few signs of a slowdown in rising prices.
“We expect the effects of rising cost of living and rising interest rates to filter out the market by the end of the year, and the combination of more supply of homes and people of their ability weight will help control the market,” said Tim Bannister, managing director of Wrightmove.
Financial markets expect the BoE to raise interest rates from 1% to 2% by the end of this year.
The Nationwide Building Society said Friday that rocketing inflation could send British home prices in the opposite direction, a clear warning that the crisis of living could end the country’s housing boom.
Economists surveyed by Reuters last week predicted that home prices would rise 6.5% this year and 2.9% in 2022. (Reporting by Andy Bruce; Editing by David Milliken)