House prices have risen more than £55,000 on average since the Covid pandemic, Rightmove’s House Price Index has revealed.
Despite concerns over a possible property market crash as the UK teeters on the brink of a recession, demand remains well above pre-Covid times according to the housing website.
The cost of living crisis borne out of record inflation, as well as four increases to the Bank of England interest rate, also appear not to have deterred the market back.
So why are house prices so much higher than they were before the pandemic - and what does Rightmove think will happen next?
Here’s everything you need to know.
How much have house prices increased?
According to Rightmove’s House Price Index, home asking prices are £55,551 above where they were in 2019 across the UK.
Average prices for properties coming onto the market are £367,501 as of May 2022.
The huge increase compares to an average rise of just £6,218 in the two years leading up to the Covid-19 pandemic - and marked the largest rise since Rightmove began tracking prices 20 years ago.
In a sign of how hot the property market is at present, it took just a month for asking prices to jump £7,400 (between April 2022 and May 2022).
Rightmove said prices were being kept high by demand outstripping supply, a situation which it says is likely to continue throughout 2022.
Its calculations found the speed of the market meant the number of available properties was 16% down year-on-year and 55% compared to 2019, with mid-market two-to-three bed semi-detached homes in the shortest supply.
However, things have slowed down since 2021, when the government’s stamp duty holiday fuelled a major house-buying spree.
The number of prospective buyers getting in touch with estate agents is 14% down on this time last year, but 31% up on 2019.
Meanwhile, the number of sales agreed is 17% lower year-on-year but 12% up against 2019.
What does Rightmove say will happen to house prices?
Rightmove said it anticipates the housing market will cool down as 2022 progresses.
“What the data is showing us right now is that those who have the ability to do so are prioritising their home and moving, and the imbalance between supply and demand is supporting rising prices,” said Tim Bannister, Rightmove’s director of property science.
“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.”
However, Bannister cautioned that “the market is extremely difficult to predict”.
One big question hanging over the market is affordability for first-time buyers.
While average monthly mortgage payments (£901) are currently above average monthly rental payments (£887), typical first-time buyer mortgages are 11% higher than a decade ago, and rents are 40% more expensive.
In fact, the property website says rents are currently rising at the fastest rate it’s ever recorded.
Analysis by Rightmove has also shown a single person on the average salary would have to have a 34% deposit (£74,402) to afford to buy a typical starter home.
This figure is 112% up from the 25% deposit (£35,053) required a decade ago.
Two people on average salaries buying a home together would be able to afford a first-time buyer home if they have saved a 10% deposit, Rightmove says, although the size of that deposit rocketed 56% from £14,269 to £22,312 over the last 10 years.
Rightmove analyses affordability by basing it on a household taking out a 90% loan-to-value mortgage, at the average two-year fixed interest rate, and looks at a typical starter home of two bedrooms or fewer, plus the average monthly equivalent rental payments.