Is the UK in a property bubble?
Image source: Getty Images. A recent report by Halifax indicates that the average price of a home now stands at an eye-watering 261,743. Thats a 22,000 (or 9.5%) increase over the past 12 months. Plot your path towards financial freedom with our Heros Journey tool! MyWalletHero is here to help you learn about taking control of your money, whether thats paying off debt, working towards a short-term money goal, or investing for your future. This tool can help you understand the next steps on your journey  simply choose a goal that best describes your current interests to get started. There a number of factors influencing the property market according to Ross Counsell, Chartered Surveyor and Director at GoodMove. He explains, We are currently in a property bubble in the UK  where we see an increase in house prices fuelled by demand. The ongoing stamp duty holiday, mortgage holidays, and significantly lower mortgage rates are all important catalysts creating a property bubble.  There are likely other factors at play too. For example, people spending more time at home has created additional demand for space. Growing expectations of increased levels of homeworking may also be driving higher prices. Because of this, many are exploring opportunities to move away from big cities. Plus, numerous lockdowns have enabled buyers to increase their savings pot, leading to higher deposits. See our tips and tricks for newbies. Aside from the Stamp Duty holiday, which will wind down later this month, the government has been criticised for its efforts to support the housing market. Many believe its existing housing policies negatively impact affordability. The governments Help to Buy scheme, for example, offers first-time buyers equity loans of up to 40% on new build properties. However, its been dubbed the Help to Sell scheme by some critics who suggest it solely benefits developers by increasing demand for new builds. Critics may also feel that the Bank of Englands recent quantitative easing programme feeds house price inflation. This is because many believe its newly created cash ends up in fixed assets including property, inflating the property bubble in the UK. Housing market crashes are notoriously difficult to predict. GoodMoves Ross Counsell suggests that its a real possibility should the right factors come into play. That said, he concedes that its unlikely to happen. If demand for property decreases at the same time as supply increases, then the bubble bursts  resulting in a housing market crash. Although this could be a worrying thought, it is highly unlikely that this will happen in the UK. Demand for property in the UK continues to be incredibly high, with people still continuing to move away from flats in cities to more spacious properties. And with many first-time buyers saving money for a deposit during lockdown, this has only fuelled demand for property. With this in mind, it is unlikely that demand will decrease to the levels necessary for a property crash to happen. Ross Counsell that if youre looking to buy a house, it may be worth waiting until later in the year: All things considered, I would suggest that now is not the best time to be buying a property in the UK. It is currently a sellers, not a buyers market, with house prices at an all-time high and huge competition making it hard for many buyers to find the right house or get the best deal for them. Its likely anyone looking to buy a home right now will be overpaying for the property, even with discounts such as the Stamp Duty holiday in place. If we have learnt anything from this past year it is that the Stamp Duty Holiday has bolstered house prices and made it difficult for buyers. So for anyone looking to buy, I would advise them to hold off until October  once the Stamp Duty Holiday has finally come to an end.  If you are considering taking the plunge, take a moment to read our complete guide to mortgages. Also, check out five of the UKs best locations for first-time buyers. Yes No  4 iron-clad rules for saving money on everything Our Editor Sam Robson has been on a personal cost-cutting mission for years  and its time to share his wisdom. Check out his choicest saving tips and tricks in this free report, Sams 4 Iron-Clad Rules For Saving Money On Everything. Just enter your email below for instant access to your free copy. Click here!