Land Registry HPI – “More mad house price growth in May” – reaction from agents and brokers

by | Jul 20, 2022

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Following the Land Registry house price data published this morning agents and brokers have commented:

Wesley Davidson, founder of broker Fox Davidson“Though house prices continued to rise at a stupendous rate in May, the perfect storm of rising inflation, higher interest rates and quantitative tightening will almost certainly take the UK into a recession. The effect of this will bring the average UK house price down by around 10% within the next 12 months. When that happens, the Bank of England will reduce interest rates and off we go again.”

James Miles, director of Exeter-based broker, The Mortgage Quarter: “House prices rose spectacularly in May and though that rate of growth is likely to cool, it’s hard to see prices falling, as supply levels are so low. We’re also still seeing evidence of people wanting to move out of large, expensive cities for a better quality of life and more space in rural areas, where they can take advantage of working from home. Even the Bank of England increasing rates is going to have little effect on house prices for now, as most people are on fixed rates and stock is critically low.”

Ross Boyd, founder of the always-on mortgage comparison platform, Dashly.com: “More mad house price growth in May but things have taken a nosedive since. Mortgage rates have been rising at a rate of knots, and more rate rises are almost certainly on the cards as the Bank of England attempts to control inflation, which is now at 9.4%. It’s inconceivable to think the housing market will remain unaffected by the current interest rate cycle, which is now firmly on an upwards trajectory. The property market will cool throughout 2022 and in 2023. When they come to remortgage, it will be less a case of rate shock for many borrowers but rate trauma. The pending remortgage crunch will significantly add to the cost of living crisis.”

Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco: “This data is not a true reflection of where the market is at right now. That was then and this is now. Economic conditions have deteriorated significantly since May. The era of ultra-cheap money is over and that will soon start to feed through into house price growth. Increased borrowing costs and the immense pressure on household finances, as seen with inflation hitting 9.4%, will almost certainly start to temper demand in the months ahead, which will see the rate of price growth slow. The one constant in these times of flux, of course, is the lack of supply and homes being built. The dearth of good quality, affordable housing for sale will support prices even as we go through an unprecedented cost of living crisis.”

Joe Garner, managing director at London-based property developer, NewPlace:Insatiable demand from an ever-growing population, coupled with a limited supply of housing and a slowing production line of new build development will see a continued upward path of house prices. While pockets of the UK will see peaks and troughs, a steady and continued climb upwards is most likely, even with interest rates expected to rise to 3% in the short term.”

Scott Taylor-Barr of Shropshire-based broker, Carl Summers Financial Services“The issue with Land Registry data, although more accurate than some reports, is that it is based on houses sold a good few months ago, so it’s a solid account of what has happened, not what is happening and so it makes it a very difficult data set to use to guess at what will happen. Anecdotal reports from more up-to-date sources indicate we’re starting to see the signs of the housing market cooling, which has been forecast for a while now, as the cost-of-living increases come through and people are seeing their monthly bills increase. Concerns about rising interest rates is also tempering people’s enthusiasm to buy property.”

Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com: “With food inflation at its highest for 14 years, energy costs expected to almost triple by January, fuel prices soaring, and cheap mortgage rates fast disappearing in the rearview mirror, I expect house prices to fall over the next year. Yes, there is a housing shortage but current prices are only sustainable with a thriving economy and ultra-cheap credit. Those days are gone. Lower house prices will be a good thing in the long run, particularly for first-time buyers. Far too high a proportion of people’s income is spent on mortgages or rent. It’s slowly strangling the economy.”

Rob Gill, founder of London-based Altura Mortgage Finance: “Much like the weather this week, the property market looks likely to come off such scorching highs but will stay pretty warm. With demand for good-quality homes remaining high, house price growth seems set to slow rather than reverse. With Wednesday’s inflation figure not just at a 40-year high but also above expectations, mortgage borrowers will be watching the next move from the Bank of England with interest. Furthermore, mortgage lenders may pre-empt any hike from the Bank of England so anyone seeking to secure a mortgage would be wise to lock in the rate as soon as possible.”

Rhys Schofield, managing director at Belper-based Peak Money“We are not going to see house prices fall this year although rising interest rates will likely slow the runaway rate of growth, which is no bad thing. How much of this is driven by actual costs in borrowing or lenders tripping over each other to not have the cheapest deal lest they get inundated is unclear. Santander, for example, held rates a few weeks ago which was very admirable but the industry rumour is that they ended up with 25% of all UK mortgage applications that week and have had a bit of a battle with service levels since because no lender is geared up for that demand.

“We have even seen some lenders stop taking applications for a week to catch up with paperwork. At the end of the day we still live in a country where there is a lack of housing and no plan, political follow through or even available trades people to build enough homes. If we continue to not build enough houses, prices will always go up. I expect to see a slower rate of growth in prices as the year goes on but still healthy growth nonetheless.”

Jamie Lennox, director at Norwich-based mortgage broker, Dimora Mortgages: “May may well have been the top of the rollercoaster with regards to house prices, although the market still feels busy. We’re seeing an influx of customers who have been searching for houses for over six months finally secure a home. Only a few months ago, these people were continuously being outbid, which suggests demand is dropping off. New homes sadly aren’t being built quick enough and the proposed quota is never achieved. Many developments get stuck in planning for years and until there is a quicker process to get sites approved the ambitious plans for a certain number of new homes won’t ever materialise.”

Dominik Lipnicki, director of Your Mortgage Decisions: With high inflation and borrowing costs, we are likely to see far more modest price increases in the months ahead. That said, with the lack of supply, a downward price correction is unlikely.”

Robert Payne, director of Bristol-based Langley House Mortgages: “The unsettling combination of inflation, rate rises and the war in Ukraine certainly suggests we are heading towards a concerning climax but the property market has continuously shone through the face of uncertainty and my prediction is that we will see more of the same. I do think we will see adaptive behaviour from homeowners as many have borrowed to their maximum capacity on the lowest interest rates in our history so they may start to struggle with increased payments on rates, which have since doubled. One particular change I think we may see is borrowers asking to lengthen their mortgage terms to reduce the monthly payments.”

Edward Checkley, managing director of London-based property finance specialists, Advias: It is hard to see how there will be a property crash when the shortfall in property stock remains a constant problem. Though rising interest rates are tempering buyers’ enthusiasm, in historic terms borrowing costs still present reasonable value. Looking forward to 2023, should inflation not fall and interest rates continue to rise, property values may see a correction to compensate for additional finance costs. However, this may not be the case if inflation eases and interest rates remain relatively attractive. We may see short-term corrections in regional locations, where buyers fought over idyllic property and areas during the pandemic.”

Paul Neal of Derbyshire-based Missing Element Mortgage Services: “The lack of stock will continue to support house prices through the cost of living crisis, even if they come off the boil a little. What we desperately need is more affordable housing stock, not stock that is snapped up by landlords or builders to make a fortune on. Reliable, affordable housing for everyday people.”

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