Private renters who are trying to save a deposit on a home to buy are having to run in order to stand still, a business analyst warns.

Hargreaves Lansdown analyst Sarah Coles makes her comment following the latest Halifax house price index, which shows house prices on average across the UK rose 1.4 per cent in March – the largest single-month rise for six months – and the average UK house price is now £282,753.

Coles says: “For anyone saving to get a place of their own, this means you’re having to run to stand still. If you’re trying to get a 10 per cent deposit together, you would have had to save £2,811 more just to be in the same position you were a year earlier. At times like this it’s worth getting any help you can, and for those aged 18-39, saving to buy their first property, who have a year until they plan to do so, a Lifetime ISA can help enormously.”

She continues: “Runaway house prices are also causing problems for second steppers, because the price of houses is stretching way ahead of flats. The average price of a flat is up just £15,404 in a year while the average detached house rose in price by £77,717. It means it takes an enormous stretch to get from one to the other.”

Coles warns that the housing sales market – although apparently flying – may come down to earth with a bump as a result of the war in Ukraine and the cost of living crisis this year. Implicitly, this suggests demand for rental property may remain very high for the foreseeable future.

“Right now may well not be a sensible time to stretch yourself. While prices are still rising robustly right now, there’s every chance that soaring bills and rising interest rates will take their toll in the coming months. 

“And quite aside from whether or not on paper your home continues to gain value, there’s the question of what you can afford. You need to ask yourself whether now is the time to be taking on a bigger, more expensive loan, when the price of everything else is going through the roof, and tax hikes are shrinking your pay packet.”

Another analyst – Charlotte Nixon, of wealth management firm Quilter – adds that interest rates are likely to rise further, making affordability a bigger problem for current renters considering buying.

She says: “The current circumstances are expected to put the brakes on runaway house prices. The situation in Ukraine remains unstable and the cost of living crisis is being felt increasingly by the day, particularly as the energy price cap and national insurance increase have both now come into play. Given the increased financial instability, first time buyers and prospective home movers will likely think twice before embarking on the expensive process of buying a new home.

“What’s more, the Bank of England is expected to increase interest rates further, which will further reduce people’s spending power. Prior to the outbreak of war in Ukraine, inflation was expected to peak at 7.25 per cent, this is now likely to be considerably higher and the only way to combat it is with increased rates. Should this happen, the already dwindling number of cheap mortgage rates will quickly disappear and monthly costs will see a swift increase. Should less people look to move home as a result, the cost of house prices may finally start to see a slowdown.

“Over the next few months we will see how the housing market truly reacts to the current circumstances, but it is unlikely house prices will continue rising at the same pace seen in recent times. If we do see a slowdown, there will likely be a gradual fall as opposed to a sudden drop as there remains simply too much demand and too little stock which will keep house prices raised for some time yet.”