According to economists, average mortgage rates should continue to fall, further fueling the spike in house prices.
Capital Economics has suggested that the average mortgage rate will drop to 1.6% by the end of next year.
Average mortgage rates held steady at around 2.1% from 2017 to 2019, the company said, before falling to 1.85% in July this year, as lenders’ risk appetite improved. .
Yorkshire Building Society chief executive Mike Regnier also suggested rates would stay low due to excess liquidity in the market.
In addition, the Bank of England is expected to keep the base rate at its current record high of 0.1% until 2023, which will favor cheaper loans.
Capital Economics said that, along with a lack of supply, would keep house prices high.
The number of used homes on the market is near an all-time low and the drop in seller instructions recorded by the Royal Institution of Chartered Surveyors (RICS) indicated a slowdown in new listings.
In June, Propertymark NAEA warned that the average stock at each real estate agency was at its lowest level in 19 years.
The company also highlighted the annual growth in house prices in other countries such as Germany, the Netherlands, Denmark and the United States, where respective increases of nine percent, 11 percent, 15 percent and 18 percent were observed.
In the UK, increasing household savings and continuing to work from home could also influence moves, further boosting house price growth.
As a result, Capital Economics has revised its forecast for house price growth for next year from 3.5% to 5%.
Andrew Wishart, real estate economist at Capital Economics, said: âThe end of the stamp duty holiday may not do much to dampen demand and homes for sale are scarce.
“Overall, tight supply and robust demand mean house prices will maintain momentum, so the consensus forecast for house prices to rise 3.5% in 2022 now looks too pessimistic.”