haart estate agents is predicting a spring boom as sellers rush to get their properties onto the housing market before the introduction of Home Information Packs on June 1.
Its latest data revealed London house prices stabilised in February, increasing by only 0.1% to £260,375, as buyers remain price sensitive despite a continuing shortage of available stock.
Paul Smith, chief executive of haart, says: “The effect of the recent interest rate rises, in particular the shock rise in January, has started to kick in.
“Buyers have become wary about over-stretching their borrowing capacity and over-priced properties are not selling despite a high level of demand.”
However haart thinks the supply and demand ratio is set to be re-balanced in the forthcoming months and predicts a 20% increase of properties to enter the market in the run-up to the compulsory roll out of HIPs.
Smith adds: “With the introduction of HIPs fast approaching, we are expecting to see an extremely buoyant spring market as many sellers opt to put their property on the market prior to June 1, to avoid the cost of a pack.
“With the high demand for properties still unsatisfied and the expected surge of properties for sale we anticipate property prices to increase by 3% by the summer months.”
First-time buyers are one of the most vulnerable groups to interest rate rises and their market share dropped 0.5% to 25.5% of the market.
haart warns that any further interest rate rise will result in the first-time buyer level plummeting.
Smith says: “Although there is only a slight decrease in the first-time buyer level, the three interest rate rises in quick succession since August have knocked the confidence of many.
“Any further rate rise is certainly going to put a stop to this crucial group entering the property market.”