Property shortage to ease soon – temporarily

Rightmove said a shortage of supply was driving prices higher in spite of higher borrowing costs and the prospect of a further rate rise.

The property website said average asking prices rose by 1.5% (£3,381) last month as the spring market strengthened and shrugged off fears of another interest rate rise.

According to the report the continued shortage of supply has more than compensated for the impact of the January rate rise. Compared to a year ago, buyers face prices that are £24,784 higher, an annual increase of 12.2%, up from 11.5% in February.

But the shortage may be temporarily eased as the Budget details will be out of the way this week and the spring surge will soon be on us, boosted by people deciding to sell before the June 1st deadline when compulsory home information packs begin.

This weeks Budget news may or may not hold something for first-time buyers but commercial director, Miles Shipside said: “Any tinkering with demand by raising stamp duty thresholds with one hand or raising interest rates with the other is likely to be insignificant compared to the potential impact of several hundred thousand extra sellers trying to avoid the extra obligations and costs of the biggest ever legislative change to the housing market in England and Wales.”

“Ironically, the extra supply and choice this will create will give hard pressed buyers some relief from the unhealthy price spiral. It is also a factor that must not be ignored when decisions affecting the housing market are being considered by policymakers at what could be a sensitive time.”

Only a respite

“As we have seen recently,” said Miles Shipside, “raising interest rates can be used to influence the direction of prices in the short term but do very little to address the underlying cause of house price inflation. Crucially they cannot address the increasing demand for housing driven by the needs of a growing population.”