Halifax House Price Index: “House prices in the capital could bizarrely benefit from a recession” – reaction

by | Sep 7, 2022

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Following the Halifax August House Price Index published this morning, mortgage and finance experts have reacted. 

Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco: “It’s beyond reason that annual house price growth is still comfortably in double digits and that prices rose in August. But with more rate rises on the cards and the cost of living crisis set to crescendo, the property market will soon come back down to earth. Higher mortgage rates and the immense pressure on household finances will almost certainly start to temper demand in the months ahead. Even then, the abject lack of good quality, affordable housing will support prices even as we go through an unprecedented cost of living crisis. There’s life in London yet and the capital may see further house price growth if the remote working trend goes into reverse as people focus on retaining their jobs during the dark economic days ahead. House prices in the capital, as the engine room of the UK economy, could bizarrely benefit from a recession, as the regions go into reverse.”

Edgar Rayo, chief economist at London-based finance broker, Finanze: “Truss’ proposed tax cuts to stimulate the economy will most likely see interest rates rise further and affect millions of existing and prospective borrowers during what’s predicted to be a severe and protracted recession. Although the Bank of England denies speculations from analysts that interest rates will hit the same level seen during the early 80s, the new Prime Minister’s strategy has serious implications for the mortgage market since it will likely compel Threadneedle Street to hike its benchmark interest rate closer to the 3.25% threshold in 2023. This will mean materially higher payments for those not locked into longer fixed-term mortgages, which shield them from interest rate hikes. Liz Truss’s expansionary measures are designed for a short-term GDP and productivity boost, but their impact on property prices could be profound.”

Mark Robinson, Managing Director of Southampton-based Albion Forest Mortgages“August was busier than ever, with first-time buyers especially active. Even as we enter a very dark winter for the economy, I cannot see house prices falling due to the sheer lack of supply. We are, however, far more likely to see a slower rate of house price growth. Though there is slightly less competition than a year ago as some prospective buyers put their plans on hold amid the cost of living crisis, it’s still a sellers’ market.”


Ross Boyd, founder of the always-on mortgage comparison platform, Dashly.com“The days of double digit price growth will soon be over as a long and cold winter looms. The obscene rise in energy bills is something that needs to be proactively addressed by lenders as the current batch of green mortgages are little more than a gimmick. Using personalised data to target individual properties, we’re currently working with a variety of high street lenders with a view to embedding energy-efficiency measures into people’s mortgages where applicable. It’s in the interest of both the homeowner who will pay cheaper bills and the lender, as energy-efficient homes will retain value and also mean borrowers are less likely to default due to astronomical energy prices. Now is the time for the mortgage industry to go green in earnest rather than continue along the current path of largely token green products.”

Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial: “Even though the economy is expected to be in the bin for the next 12-18 months, I don’t expect the property market to implode as the UK still suffers from a massive housing shortage. We will almost certainly, however, see a marked slowdown in the rate of price growth. Transaction levels may well go off a cliff as moving house is not a priority when you are penny-pinching due to frightening increases in energy bills, food shopping and the cost of living more broadly.”

Ross McMillan, owner at Glasgow-based Blue Fish Mortgage Solutions: “Though the property market remains in a relatively healthy state for now, there’s nowhere near the frenzied activity that has defined the market during the past couple of years. We’re typically now seeing just two or three buyers competing for a property rather than two dozen, as was the case this time last year. In some instances, some old-fashioned negotiation between a single buyer and seller is now making a comeback. While there is still a general lack of supply, sellers’ expectations are also becoming more reasonable and generally more in line with valuations. The current flattening in the market and greater equilibrium between buyers and sellers is a good thing and in the past month I have had several clients make successful offers after some had been looking and offering unsuccessfully for over two years. Unlike the Global Financial Crisis of 2007/08, arguably the most important element of the housing market is that it remains fluid and functional so while prices may stagnate or fall slightly due to the cost of living crisis, I am confident that demand will remain and transactions will continue, albeit at lower levels than the past two years.”


Mike Staton, director of Mansfield-based Staton Mortgages: “August is usually a relatively quiet month in the mortgage and property market, but this time round there were no signs of a dip in activity. It may be that people are keen to buy, lock into a low rate and batten down the hatches before we enter a time of potentially extreme economic turbulence. First-time buyers remain a particularly active demographic within the market, with many now looking at higher loan-to-values of 90% to 95% mortgages due to the house price inflation of the past two years. Though we are starting to see a reduction in the level of competition to buy houses, it remains a sellers’ market for now as there are still more than enough buyers out there.”

Lewis Shaw, founder of Mansfield-based Shaw Financial Services: “August, as absurd as it may sound, was off the charts, with first-time buyers leading the way. The volume of enquiries and calls we’re getting remain at record levels, which is starting to feel a bit odd given the cost of living crisis and rising interest rates. It should be getting quieter, yet we’re seeing the opposite. With two years of breakneck house price growth, it’s as though the property market has uncoupled from the economic train and is now freewheeling down the tracks without any brakes. Let’s hope for a gradual slowdown rather than crashing into the barriers. The fact that we’re now seeing loans for prime borrowers nudge over 5% may well start to see demand fall slightly and result in a cooldown rather than a crash.” 

Imran Hussain, director at Nottingham-based Harmony Financial Services: “August is historically a quieter month, like December, but this year, despite the fact rates are rising and bills are skyrocketing, it was like the Wild West. With rents rising quicker than ever before, we’re finding that first-time buyers are keener than ever to get onto the housing ladder. Mortgage rates may be rising but in many cases it’s still cheaper to own than to rent.”


Michael Aldridge, director of Chippenham-based Lucra Mortgages“Despite the growing number of doom and gloom prophecies, the housing market continues to defy logic and house prices continue to boom. Some analysts predicted the property market would be on its knees by now but despite an apparent perfect storm it still remains very buoyant. Without doubt, the squeeze on household spending will start to have an impact on demand and, in turn, prices, but several factors are counterbalancing this. Housing stock remains very low, employment levels very high and though interest rates are rising, they are still at historically low levels. Though the rate of price growth will almost certainly start to cool, I just can’t see a crash.”

Edward Checkley, managing director of London-based property finance specialists, Advias:August has been consistent with most of 2022, with people transacting against a backdrop of rate hikes, slow conveyancing and drawn-out lender processing. Buyers looking for the right property are still looking and taking the view that a mid-3% mortgage rate is still good in terms of longer-term averages. Investors are certainly reappraising their strategies as limited company rates are typically north of 4%, with some tipping into the 5% space. We have certainly noticed a slowdown from overseas buyers who face a double surcharge cost in stamp duty and less attractive interest rates to offset this cost. We believe that house price growth will level out from here, with the lack of housing supply keeping a decline at bay from the inevitable economic jitters and the cost of living crisis.”

Charles Yuille, managing director of Bath-based Willow Brook Mortgages: “With inflation going through the roof and energy bills set to hit terrifying heights, a moderation in the rate of house price growth is now inevitable, but the egregious lack of stock will prevent any material drop in house prices. The cost of living crisis is definitely hitting wallets and confidence hard but for now the employment market remains strong. As long as people have jobs, there will be demand for property. If jobs start to go at scale, that’s when we could see prices fall.”


Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com: “For us, August was still busy but we’ve noticed a marked change in buyer sentiment since the new energy cap was announced. Whilst some lenders attempt to mitigate the effects of higher mortgage rates by increasing their maximum loan-to-income ratios, that’s mainly for employed applicants. The self-employed are largely restricted to 4.5 times income. Property prices have ballooned to increasingly absurd levels over the past two years and are unsustainable. I believe we’ll see a 5-10% fall over the next year. We actually need house prices to not increase at all for about a decade or more, to allow wages to catch up.”

Jamie Thompson of Manchester-based Jamie Thompson Mortgages: “There’s no such thing as a buyers’ market in the UK. I don’t think there ever will be again. The only way to tip the balance back towards buyers and away from existing owners who are now sat on eye-watering amounts of equity in their property it to build more homes and we’re not doing that. I’m doing mortgages at the moment for people who bought their first house just two years ago placing down 5% and 10% deposits who now have so much equity they are moving up from small starter homes to detached family homes. Lenders’ criteria are getting more lax by the day with Nationwide extending the 5.5 times income limit to existing customers, not just first-time buyers with higher incomes, and Halifax and Accord are also increasing the maximum borrowing amount for many borrowers. As the banks allow buyers to borrow more they will increase their bids and house prices will remain high. It’s simple economics.”

Dominik Lipnicki, director of Your Mortgage Decisions“August proved to be a busy month, especially on the remortgage front with borrowers keen to fix their mortgage rate. So far, the housing market has remained strong but house price increases are likely to dampen as the cost of living crisis bites. Without a doubt, we face an uncertain future with some predicting mortgage rates unseen for well over a decade.”


Scott Taylor-Barr of Shropshire-based broker, Carl Summers Financial Services:We’re entering uncharted waters in terms of the economy, so how things play out ultimately is as much luck as judgment. I’ve personally seen a noticeable reduction in the number of enquiries coming in for people looking at buying property, but many people are keener than ever to review their existing mortgage, so activity is still at the same level in the mortgage market overall. The shift away from property purchase will no doubt have an impact on house price growth, maybe even stalling it completely for a period, but I can’t see any widespread falls in house prices as long as mortgages are still available to the majority of potential buyers. If mortgage lenders for some reason constrict mortgage availability, then that may have a negative effect on house prices, as only those with excellent credit scores and larger deposits will be in a position to buy.”

Rob Peters, director of Altrincham-based Simple Fast Mortgage“August was another strong month to bolster a year of strong months. While many naysayers have predicted the property market’s wheels to come flying off, for now at least the market has defied the laws of inflation and energy rises to come out victorious again. The almost frantic stream of new buyers has been replaced by a seemingly steady stream of movers and remortagers with many investors sitting on the sidelines ready to pounce should economic opportunity come knocking. So no drastic change just yet, but like the weather as we approach Autumn, it does feel as though the wind has shifted course slightly.”

Nicky Stevenson, Managing Director at national estate agent group Fine & Country: “The outlook for the housing market may depend on the stimulus measures currently being finalised by the new Prime Minister. At present, disposable incomes are being eroded by inflation which is causing a very gradual slowdown in annual price growth. A package of tax cuts and energy price freezes could boost buyer affordability, reverse the current softening in the market, and give a second wind to the boom. Meanwhile, London continues to make year-on-year gains as workers drift back to the office. Momentum in the capital may well accelerate in the months ahead regardless of the picture elsewhere.”


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