© Reuters. FILE PHOTO: High-rise apartments under construction can be seen in the distance behind a row of residential housing in south London, Britain, August 6, 2021. REUTERS/Henry Nicholls
LONDON (Reuters) – Asking prices for houses in Britain surged again in May, pushed up by a lack of new homes coming to the market rather than strong demand which looks set to fade as the cost-of-living crunch tightens, a survey showed on Monday.
Property search website Rightmove said asking prices for property put on sale between mid-April and mid-May rose by 2.1% after a 1.6% rise the month before. It marked the biggest May increase since 2014.
Compared with a year ago, asking prices are 10.2% higher. The survey is not seasonally adjusted.
The report echoed other gauges that show Britain’s housing market retained much of its momentum in the first half of 2022, despite the phasing out of temporary tax breaks on property purchases in the second half of 2021.
But with household budgets being squeezed by high inflation and tax rises, Rightmove had doubts about whether the housing market can keep up its recent strength – even though there is scant sign of a slowdown in price growth now.
“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, and a combination of more supply of homes and people weighing up what they can afford will help to moderate the market,” said Tim Bannister, Rightmove managing director.
Financial markets expect the BoE to raise interest rates to 2% by the end of this year from 1% now.
Nationwide Building Society said on Friday rocketing inflation could send British house prices into reverse, in one of the clearest warnings yet that the cost of living crisis could bring the country’s housing boom to an end.
Economist polled by Reuters last week forecast house prices would rise 6.5% this year and 2.9% in 2022.