Demand has kept pace throughout the year irrespective of market conditions.

Despite current economic conditions – including consecutive interest rate hikes and the cost-of-living crisis – the average seller in England and Wales has achieved 99.4% of their original asking prices this year.

That is according to the latest data released by estate agent comparison site GetAgent, which also revealed sellers are getting 2.4% more for their property when compared to this time last year.

Demand has continued to increase throughout the year irrespective of market conditions, with supply remaining low and pushing house prices up.

“It is no secret that times are becoming harder. The war in Ukraine, the impact of Brexit and the rising prices of food and fuel are just some of the many complex reasons why we are having to become more economical in all aspects of our daily lives,” said Roger Hughes (pictured), business development manager at Skipton International.

Yet property prices are still soaring and a shortage of property for sale still remains, leading people to believe it will be a seller’s market until at least next summer.

According to Ipsos, an independent market research and consulting firm, seven in 10 Britons expect house values to climb even higher nationally, and two-thirds expect to see increases in their own counties.

“Just 18% consider a further rise in prices to be good for the country, but 41% admitted they will personally benefit from any rise that may happen,” said Hughes.

He continued by explaining that 59% of Brits believe the next 12 months will be a good time to sell a property, while 35% said they believe it will be better to buy one.

So why have sellers achieved 99.4% of their asking prices this year, despite consecutive interest rate hikes?

From Skipton International’s perspective, Hughes explained that its mortgage pipeline is currently made up of 90% buy-to-let applications from expats and foreign nationals living across the globe.

He believes this proves the attractiveness of properties to non-UK residents, who see Britain as a safe jurisdiction in which to invest in bricks and mortar.

Looking to research recently conducted by London-based lettings and estate agent Benham and Reeves, the value of foreign-owned homes by individuals currently stands at £90.7 billion across England and Wales.

“For many of these purchasers, UK house prices are relatively low in comparison to where they are living,” said Hughes.

Hughes explained that, as such, he believes investors will continue to look at the UK market resulting in continued demand for property.

“Skipton analysed its latest available data on the number of mortgage applications currently within its pipeline and the research showed that the value of applications from Hong Kong residents has doubled since the beginning of the year, with noticeable increases also seen from the UAE and Singapore,” he said.

Hughes noted that for the month of July 2022, the value of Hong Kong applications was higher than the whole of Skipton International’s UK mortgage pipeline.

He went on to say that it is not just domestic homeowners who have benefitted from rising house prices in recent years. 

“The value of homes owned by overseas buyers has risen too, and our records show that there remains considerable interest in purchasing UK property for rental purposes from all corners of the globe,” he added.

As a result, sellers have continued to achieve their asking prices, despite difficult economic circumstances within the UK.

Rate Of House Price Growth “Surprising”

Senior economist, however, predicts economic hardships will bite.

Double-digit house price growth last month came as a surprise given the economic headwinds the country is facing, Nationwide’s senior economist, Andrew Harvey, has admitted.

Annual house prices in the UK increased by 11% in July compared to 10.7% the previous month, according to the Nationwide House Price Index.

It was the 12th consecutive monthly increase, showing that prices also rose by 0.1% month on month, with average house prices now reaching £271,209.R

The rate of growth surprised some market experts who pointed out that demand for homes was slowing down amid rising rates, the cost-of-living crisis and spiralling inflation, which last month jumped to a 40-year high of 9.4%.

Nationwide’s data also showed that total housing market transactions in the three months to May were roughly 20% below the levels achieved during the stamp duty holiday, although they were still 5% above pre-pandemic levels.

Harvey echoed the view shared earlier by his colleague and chief economist at the Nationwide, Robert Gardner, saying that he had been surprised by the housing market’s resilience.

“At this point, we might have seen things starting to soften. We would have thought that some of these (economic) pressures would have started to translate into a more meaningful slowdown in prices,” Harvey said. “It’s quite clear that the headwinds are growing – the average mortgage rates have crept up quite a lot in the last few months, and, at the same time, we’ve seen the pressure increasing on households from rising inflation.”

Explaining the data, he noted that a combination of low unemployment (it is close to 50-year lows, with the number of job vacancies approaching record highs) together with a lack of supply of homes for sale had been “quite a big factor in terms of keeping upward pressure on prices”.

In addition, first-time buyer numbers were also proving to be resilient.

Split by sectors, he said investors were helping to buoy the market, noting that the buy-to-let segment “seems to be doing quite well at the moment”.

Additionally, rental market growth was also proving to be quite strong, as demand was still high.

“With inflation still running strong it could be that some people are using buy-to-let and other investment properties to help serve as a hedge against inflation. It seems that the investment part of the market is proving quite resilient at the moment,” he explained.

That included the purchase of second homes and/or holiday homes, a pattern repeated by landlords who wished to expand their portfolio.R

However, Harvey pointed out that some of the cost-of-living pressures and the increase in mortgage rates had not yet “fully translated through” to household budgets, although this would become more apparent later on in the year, once additional energy price increases came into effect in October. 

“It does take people a while to react to those changing mortgage rates,” he said. “So maybe the increase in mortgage rates we’ve just seen in the last month or so may not be fully reflected yet in terms of price patterns.”

Looking ahead, he said he expected a slowdown in house prices during the fourth quarter, which would translate as single digit growth of about 7%-9% by the end of the year.

“It’s unlikely that these sorts of (double-digit) levels could persist because house prices have been outpacing earnings for some time,” he added.