The average UK house price was £264,000 in August, which is £25,000 higher than a year ago, according to the latest Office for National Statistic’s house price index.
In the year to August house prices were up by 10.6 per cent, about 2 percentage points more than in July, but despite the rebound, some experts aren’t so quick to celebrate.
"On the surface, all is well with the property market,” said broker Lewis Shaw, founder of Mansfield-based Shaw Financial Services.
“But make no mistake: we've not seen the true financial impact of Covid or Brexit yet, and we have all the ingredients for a nasty Winter of discontent."
Scott Taylor-Barr, a broker at Shropshire-based Carl Summers Financial Services, agreed the forecast for house prices post-August was looking “a lot less favourable”.
"We've all become a bit numb to record house price rises over the past 18 months, but it's quite possible that's all about to change,” Taylor-Barr said.
“With the end of the stamp duty holiday, furlough being withdrawn, stubbornly high inflation and looming tax rises, the forecast for house prices is looking a lot less favourable.
“Add in the usual Christmas slowdown and we can expect the property market to lose some of the wind from its sails in the months ahead."
Some brokers also fear an interest rate rise could negatively impact the mortgage market in the latter months of 2021, as lenders begin to raise their historically low rates.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Although inflation has slowed against all odds, inflationary pressures remain which are pointing towards an interest rate rise at some point.
“Whether the inflation spike is transitory or structural is at the root of the debate, although the Bank of England seems to be hinting at an increase.”
Earlier this week, Bank of England governor Andrew Bailey told bankers it will “have to act” on inflation, in another signal that the bank is seriously considering raising interest rates.
Harris continued: “The markets have already priced in a rate rise, and maybe two or three by the end of 2022, and lenders have been swift to increase their cheapest fixed-rate mortgages.”
Nationwide, Barclays, NatWest, Halifax and Platform have all raised their rates in recent weeks. Harris expects others to follow suit.
Anna Clare Harper, chief executive of property consultancy SPI Capital, highlighted the added fear of a “social disaster” as the result of rising house prices and less affordable options for first-time buyers.
“The trouble is, rising house prices are in direct conflict with other government objectives,” she explained. “More expensive housing makes homeowners feel confident, which is great for the economy, but also makes housing less affordable and less accessible.”
Clare Harper continued: “This is a recipe for social disaster, since it comes at a time when many landlords are giving up due to the burden of laws and regulations affecting properties and their management.”
The chief executive cited the ‘North-South’ divide, as well as the widening gap between older and younger generations.
Her prediction is some kind of tax reform to “level the playing fields” between the older ‘haves’ and younger ‘have-nots’.
ruby.hinchliffe@ft.com
