Following the Nationwide May House Price Index being published this morning a selection of estate agents, mortgage brokers and developers have shared their views.
Amey Hellen of Derby-based estate agents, Boxall Brown & Jones: “The fast-paced, aggressive market conditions we have become used to may be over as people re-evaluate whether this is indeed the right time to buy. May 2022 was exceptional for exchanges and completions, probably our busiest month since the end of the first pandemic lockdown, but felt quieter in terms of prospective buyers looking to purchase homes. If buyers do drop out of the market, reducing demand, we may finally start to see some parity with supply, which in turn will slow price growth.
“We do not see a crash materialising or prices falling but instead a much steadier market until living costs are reduced, especially gas and electricity bills. They really are weighing on people’s minds. Mortgage rates will need to rise a lot more to start impacting borrowing and house prices, as they are still very low by historical standards. If affordability checks and budgeting are done correctly and if someone is finally in a position to buy, especially if they are a first-time buyer seeking to get out of rented property, many are still going for it. Home improvements may have to be put on hold, though, as people focus on outgoings.”
Ross Boyd, founder of the always-on mortgage comparison platform, Dashly.com: “The continued momentum in the property market is less surprising than absurd. Annual price growth may still be in double digits but few can deny that the property market has some significant challenges ahead. The rising cost of living is eroding confidence by the day and interest rates are rising. The low rate paradise we have been in for so long is now lost. The one positive is the jobs market, which is holding up for now. But if we enter a recession, as many are predicting, job numbers will deteriorate and that will hit sentiment, reduce demand and potentially increase supply as people are forced to sell.
“The result will be prices coming under pressure. The property market has had a surreal two years of growth since the stamp duty holiday was introduced but a cooldown now looks a nailed-on certainty, despite the strength of the market in May. The property market is driven by confidence and that is disappearing by the day. This is the calm before the storm.”
Jamie Lennox, director at Norwich-based mortgage broker, Dimora Mortgages: “The tide could be turning as a number of clients who have been house hunting for the past six months are now finally getting offers accepted where, before, they were consistently being outbid by other buyers. A lot of buyers currently are committed to the idea of moving but once they finally complete we believe the housing market could start to dramatically change with a lack of new people considering moving. Prices in Norfolk, like much of the country, have so far remained extremely resilient in the face of rising interest rates and inflation. This is largely due to the extreme lack of stock in our area. On top of that, there is a lot of London money flooding in from people looking to relocate as the shift to remote working continues.”
Joe Garner, managing director at London-based property developer, New Place Associates: “While the jobs market appears to be robust for now, rising living costs are likely to negatively impact affordability calculations of mortgage applicants in the months ahead. The lack of a replacement of the Help to Buy scheme is exacerbating uncertainty in the market and may well drive transactions during 2022.
“Despite the cost of living crisis, our analysis of the market points to a ‘panic buy’ situation later in the year as the deadline for Help to Buy looms, followed by a stagnation in sales prices coupled with a significant cost increase in private rental rates. The Kafkaesque bureaucracy of the mortgage application approval process, coupled with overloaded solicitors and nervous valuation surveyors, could result in a quick, sharp knockout blow to property transactions in the UK.”
Rob Peters, director of Altrincham-based Simple Fast Mortgage: “During May 2022, the property market continued on almost undeterred by rising rates, inflation and costs of living. This is partly due to the fact we are still sitting in a time lag zone, where the full impact of these economic stressors has not filtered through to the data. I would expect a property slowdown in the coming months, but do not feel we have a potent enough mix of disastrous ingredients at this point for a full blown property recession.
“Property buying activity will continue to be driven by lack of houses and the British public’s will to own bricks and mortar of their own. While the dream of purchasing a home may move further into the distance for first-time buyers, and those in a weaker financial position, there are presently sufficient buyers in a strong financial position to take their place.”
Lewis Shaw, founder of Mansfield-based Shaw Financial Services: “The property and mortgage market in May was busier than Sue Gray so there’s still life in property, even if it’s not as robust as it was six months ago. Even though rates are rising, inflation’s biting, and wages are stagnating, there is no let-up in demand. And while house prices show signs of slowing, that doesn’t automatically translate into a property market crash.
“They couldn’t continue at the same pace, so a brief pause to catch our breath is a good thing. Of course, the question on many people’s minds is: are we heading for a recession? Unfortunately, we have all the necessary and sufficient conditions for a recession: decaying consumer confidence, raging inflation and stagnant wages. Sadly, all rivers lead to the sea at the moment.”