Cost of living fails to put dampener on demand for homes

Estate agents are still getting plenty of inquiries from would-be homebuyers despite concerns that the cost-of-living crisis would start to put people off moving house.

For much of the past two years the UK property market has been characterised by a large number of buyers battling it out for few homes, a trend that has pushed house prices to record highs.

Some industry experts had expected the market to cool over the spring and into summer as the surging cost of everything from petrol to washing machines takes its toll on household finances.

The Bank of England has also been putting up interest rates, which will increase monthly mortgage repayments and limit how much people can borrow.

However, in April, for the eighth month in a row, a net 10 per cent of estate agents around the country reported a rise in new buyer inquiries, according to the latest residential market survey by the Royal Institution of Chartered Surveyors.

There remains a shortage of houses being put up for sale, with most agents seeing a small drop in the number of new listings in April. On average each estate agency branch has 38 homes for sale on its books, which the RICS said was “extremely low”.

The number of valuations that agents are asked to do, a key indicator for how many homes will be put up for sale in the coming weeks, is the same as it was 12 months ago.

Savills, the estate agent, told investors at its annual meeting yesterday that “stock availability continues to be significantly reduced” against this time last year, while residential sales have been lower than during the “unusually strong” first few months of 2021.

With there being little sign of any improvement in supply and many still wanting to move, house prices are continuing to rise to new records. A net 80 per cent of the respondents in the RICS survey said selling prices were increasing, up from 74 per cent in March.

Tarrant Parsons, an economist at the RICS, said there was “little evidence, at this stage, of house price inflation losing much momentum”.

In a year’s time, a net 62 per cent of the estate agents and surveyors expect house prices will be higher than they are now, although that is down from 78 per cent in February. Most agents expect sales to rise over the summer, although they are more cautious for the longer term, with a net 4 per cent expecting sales to fall over the next 12 months.

“Despite growing macro headwinds . . . the UK residential market continues to see modestly positive trends in new buyer inquiries,” Parsons said.