In the last couple of years we have seen a jump in house prices, aside from Covid-19 having an impact, inflation has also had a role to play in the hike in prices.
What is inflation?
Inflation, in short, is the cost of goods increasing either monthly or annually. Whilst this may not be noticeable on a monthly basis this can have an impact on our affordability in the long run.
How is this affecting house prices?
From August last year we have found that inflation rose by 3.2%. With such a sharp rise house prices were also reflective of this.
In February the Bank of England rate increased from 0.25% to 0.50%. This has a direct effect on the housing market as it affects mortgage rates. If the bank rate continues to rise this affects those who have variable mortgages, this also has a knock on effect to the house prices. Usually because people less are willing to take out lending and mortgages house prices will typically dip to encourage more people to buy.
Where are we now?
Despite the Bank of England increase in rate at the beginning of this month we are yet to see a knock on affect of this. In fact we are still continuing to see a rise in house prices here in the South West.
What do you think house prices will do?