Following the Halifax May house price index published this morning, mortgage and property specialists have reacted.
Jamie Minors, managing director at Norwich-based estate agents, Minors & Brady: “Though the annual rate of house price growth is in the red for the first time since 2012, this has a lot to do with the strength of the property market this time last year. The fact that growth remained flat in May is a more accurate gauge of the market. Clearly the volatility in the mortgage sector at the tail end of the month is likely to have impacted some buyers’ confidence, but they have not headed for the hills. The jobs market is a massive driver of sentiment and for now that is holding up. All eyes now are on the next interest rate decision later this month.”
Chris Barry, director at Gloucester-based conveyancer, Thomas Legal: “While there is certainly likely to be a cooling in demand over the next month or two, committed buyers will continue to buy. We had a record May in terms of the number of new enquiries but it’s likely June and July activity could decline as the number of new buyers coming to the market reduces following the latest spate of mortgage rate increases. In our experience, estate agents have the highest stock levels in years and clients who have mortgage offers, but haven’t found a property yet, are making offers before the product they have secured expires. House prices have risen circa 30% over the past four years so I don’t see a small pullback in value caused by the mortgage market mayhem of the past fortnight affecting buyer behaviour that much.”
Kim McGinley, director at Lee-on-the-Solent-based Vibe Specialist Finance: “Annual house price growth may be down for the first time in 11 years, but what we are witnessing is a correction rather than a crash. This may be reflected in the fact prices were flat in May, following a fall in April. After the mini-Budget, confidence in the property market fell sharply but during the spring sentiment steadily improved as mortgage rates came down and the economic outlook felt less bleak. Despite the upheaval in the mortgage market over the past fortnight, people have accepted the new rate environment and are getting on with their lives.”
Kevin Dunn, mortgage and protection adviser at Leicester-based financial planner and mortgage broker, Furnley House: “Though the headline number showing the first negative annual price growth in over a decade makes for grim reading, the flat trajectory of growth in May is a better reflection of where the market is at. Buyers have now adjusted to the higher interest rate world we’re in. The property market is proving more resilient than many thought given the sheer number of headwinds facing the economy, although what happens later this month at the next MPC meeting could clearly have an influence moving forward.”
John Choong, a markets analyst at InvestingReviews.co.uk: “The latest CPI inflation print caused a ruckus in the mortgage market, as smaller mortgage providers withdrew their packages within hours as gilt yields spiked. However, this seems to be a blip in the grand scheme of things, as mortgage providers are beginning to report a rebound in customer activity after a hectic fortnight. As such, house prices going into the second half of the year should remain relatively steady as unemployment remains at healthy levels with slowing inflation also easing pressures on household income. More encouragingly, gilt yields have dropped back to their pre-April CPI inflation print levels, which could help to push mortgage rates lower in the months to come. Having said that, you can’t rule out higher mortgage rates if inflation continues to come in hotter than expected.”
Kundan Bhaduri, director of London-based property developer and portfolio landlord, The Kushman Group: “The property market is powered by sentiment and there’s no doubt that sentiment has been affected over the past fortnight as lenders have repriced across the board, often at short notice. Many buyers are once again wondering, what’s going on? However, supply is still low and the jobs market is proving resilient so while the property market may come under some additional pressure over the summer, it certainly won’t pop. Crucially for transactions, buyers and sellers are increasingly seeing eye-to-eye on pricing and that is keeping the market moving.”
Nick Harris, co-founder at Wokingham-based Quarters Residential Estate Agents: “Despite the uncertainty that gripped the mortgage market at the end of May and during June to date, the property market is still moving along. While some discretionary buyers continue to sit tight, serious buyers remain very active. Sellers are being much more realistic on price, and are typically also buyers so they appreciate a more balanced property market. Though there has been some turbulence during the past two weeks, the property market armageddon some predicted is simply unlikely to materialise.”
Adam Smith, Founder at Northampton-based Alfa Mortgages: “Mortgage payments have been on the rise again over the past two weeks so a further increase in the base rate this month will be less than ideal for the property market. Nevertheless, it’s important to remember that we have enjoyed a decade of ultra-low interest rates, and what we’re experiencing now is simply a return to a more normal interest rate environment. People will adapt because they have to.”
Amit Patel, adviser at Welling-based mortgage broker, Trinity Finance: “It’s still over a fortnight away but attention is already turning to this month’s Bank of England interest rate decision. If the Monetary Policy Committee decides to increase the base rate again, they are going to hurt homeowners and renters alike. They don’t appear to have any awareness of the real world. They are hellbent on making life a misery and a struggle for millions of people.”
