It was expected. The average house price showed growth in the current May report released by Rightmove. With yet another increase by the Bank of England’s Monetary Policy Committee (MPC) in their last meeting, it was expected there would be a rush to buy. Rather than pay perhaps even more with the next rate hike or face higher offers from lenders, buyers took action and entered the market with a serious intent to buy. The average house price reflected the strong demand, but it was higher than could have been predicted due to the four consecutive standard base rate hikes by the MPC.

According to Rightmove, the average house price grew by 10% to £375,501. This marks another record high.

The housing market’s average asking price has risen by more than £55,000 since the beginning of the Covid-19 pandemic in 2020. The average increase in the two years previous to the pandemic start recorded an average increase of only £6,000.

Rightmove also reported that properties changed hands faster than ever in May. Sellers were able to find a buyer in an average of only 31 days. However, a slowdown in the market is expected in the next quarter or perhaps later as higher asking prices, continued low supply, and inflation takes a toll on buyers and confidence declines. The current conditions will also close out many first time buyers from affordability.

Rightmove’s Tim Bannister, remarked, “We anticipate that the effects of the increased cost of living and rising interest rates will filter through to the market later in the year.  A combination of more supply of homes and people weighing up what they can afford will help to moderate the market.”

Other important data released by Rightmove reveals the strong demand as well as the current hardships for first time buyers. The number of estate agents being contacted by buyers is still a third higher than the normal 2019 housing market, but it has fallen by 14% in the year to year comparison. Also, available properties have dropped by 16% in comparison to last year.

The next possible rate hike by the MPC could occur next month in the June meeting. It is still unclear as to if the MPC would do yet another rate hike or allow the rate to remain steady for further adjustment to inflation. Due to there being no meeting in July, the odds could be for a rate hike in June. This could very well offer motivation for borrowers to take action soon rather than later, especially for large value loans such as mortgages and remortgages.