Will Record Property Price Increases Continue?

Published / Last Updated on 23/08/2021

House price inflation has continued to push property prices even higher with the latest annual growth sitting between 12-13%.  The question is will these record property price rises continue now that the stamp duty holiday has ended and people are starting to return to near normal working conditions.

The rush to the coast or country or looking for greater living space will continue as many businesses adapt to a hybrid model of part-time home working and part-time office based.  With that, we also believe there is going to be increased demand for one and two bedroom apartments in town and city centres.

Many commentators are predicting rises to continue for another 12 months of between 5-10% and then it may level off.

Factors that may affect the property market:

Affordability – as prices rise, the multiples of income needed to cover a mortgage will get even higher and therefore less sustainable.  Many lenders are already struggling with self employed people and furloughed employees who both suffered income falls during the pandemic.  In addition, there are many that will have fallen into arrears.  All of these may restrict our ability to borrow money.

Earnings – will need to catch up eventually to bring income multiples back into line, this may result in a slow down and fall back on prices.  That said, if you then fell into negative equity as we saw in the 80s, 90’ and after the credit crunch crisis, there may be a few years of catch up as people are unlikely to sell for less than they paid, so there may be some stagnation.

Intervention – government, central bank and regulatory intervention may also play some part in laws, increased taxation, interest rates or regulatory rules on suitability and affordability of mortgages.

Supply – there is clearly a shortfall in available property despite new build plans.  Many properties that were available for rent have now been sold by landlords and we cannot see supply increasing dramatically as a % per population.

Either way, we will still look in the long term to Mark Twain:  “Buy land, they're not making it anymore”.


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