An analyst is warning that the latest buoyant house price figures could be the last hurrah before a significant depression.
The Nationwide’s latest index showed a surprise increase to 12.6 per cent from 11.2 per cent a month ago.
But Sarah Coles, senior personal finance analyst at business consultancy Hargreaves Lansdown, says the impact of the war between Ukraine and Russia will have a profound impact on sentiment from now on.
“This could be the final hurrah of the market before the gloom sets in … Nobody likes uncertainty, but house buyers loathe it” she says.
“When you’re about to make one of the biggest financial decisions of your life, fears about the possible escalation of war and the profound consequences it could have for the world and for your finances will weigh heavily on your mind.
“The conflict also means the price of gas and oil is rising significantly, which is likely to push inflation up way beyond the Bank of England’s prediction of 7.25 per cent.
“Previous predictions that inflation would fall back by the end of the year are starting to look wildly optimistic.
“Buyers are aware that this could put banks under pressure to raise interest rates, which would make mortgage borrowing more expensive. Anyone considering a purchase needs to be comfortable with this risk – and not everyone will be.”
Coles says that at the same time, these rising prices will make the cost-of-living crisis even worse.
“Some households are already borrowing more to make ends meet, and those with a bit more wiggle room in their budget are squirrelling money away to last them through more difficult times.
“As new and dramatically higher energy bills hit the mat, there will come a point when stretching your finances to get onto the property ladder feels like a step too far.”