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How has the industry reacted to latest Halifax HPI data?

by | Jun 7, 2024

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Following Halifax’s latest HPI data that showed average house prices stabilising in May, industry experts have shared their thoughts on what this means for the property market.

Nathan Emerson CEO at Propertymark comments: “The housing market seems to be generally moving in the right direction, with house prices going up annually from this time last year. With a general election now on the horizon, there may be potential caution from buyers and sellers, especially those hoping to step onto the housing ladder for the first time, as they await any announcements regarding government support. People will also be carefully awaiting the Bank of England’s next announcement this month.” 

Robin Rathore, CEO of Bamboo Auctions says: “Over the last few months more vendors have been coming to the market as we start to see a greater realignment of buyer and seller pricing expectations. With falling inflation and the prospect of interest rate cuts in the not-too-distant future, green shoots for the property market are starting to reappear as buyers return to the market with more confidence.

 
 

“Today’s Halifax announcement supports the same trends we are seeing from our partner agents. News of the summer election has also been a welcome one, along with steadying inflation and we expect this to bring some stability back to the market in the second half of the year.”

Foxtons CEO, Guy Gittins, says: “Today’s house price figures provide further proof that the UK property market is in great form and, while this may have started with an initial spring surge in buyer interest, we now look set for a summer of sustained market activity. 

“In recent weeks we’ve seen buyer enquiries peak to some of their highest levels in recent years and sellers are responding favourably with the same peak being seen in the number of offers accepted. This is despite the fact that interest rates are yet to come down. We’ve also seen no inkling of election related jitters on either the side of buyers or sellers.”

 

CEO of Yopa, Verona Frankish, commented: “The property market looks set to enjoy a summer of stability with buyers and sellers having adjusted to the new norm with respect to current mortgage rates.

“The expectation of a rate cut on the horizon will also be tempting many buyers back to the market over the following months and when it does materialise, we expect the current rate of house price growth to accelerate.”

Ruth Beeton, Co-Founder of Home Sale Pack, says: “A further stabilisation of the property market was to be expected given the positive growth seen in mortgage market activity in recent months and the landscape has settled considerably when compared to much of last year.

 
 

“Affordability certainly remains an issue and will continue to constrict buyer purchasing power, however, the outlook for the year ahead is a very good one all things considered.”

Director of Benham and Reeves, Marc von Grundherr, commented: “Having now weathered a sustained hike in interest rates, the UK property market has brushed off the marginal dip in form seen across the back end of last year and continues to stand firm, with little sign of this changing over the remainder of this year.

“This market momentum is only going to build as we enter the busiest time of the year and with the additional boost of a rate cut imminent, now is the time to get your house in order if you’re planning to sell your home in 2024.”

 
 

Director of My Home Move Conveyancing, Alistair Singer, commented: “Another strong month demonstrates that buyer confidence is building despite the fact that interest rates are yet to come down.

“With a stable and strengthening housing market, any election activity is unlikely to have a material impact on momentum. Indeed, depending on the outcome, we often get a post-election bounce so we expect the market to strengthen further as the year progresses. 

“Although it’s important to note that as the market does heat up, the time it takes to transact is likely to increase as higher demand puts strain on operational efficiency and market capacity including the conveyancing process”

 

Daniel Austin, CEO and co-founder at ASK Partners, said: “The property sector is recovering. Rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential. In the realm of commercial real estate, factors like physical condition, location, and age significantly influence a property’s value. Well-maintained properties boasting modern amenities tend to command higher prices, while neglected ones may struggle to attract tenants or investors. In the current market, the emphasis has shifted towards the importance of location and quality over the yield on debt or cost and now that values have largely bottomed out we are seeing more market activity with opportunistic acquisitions of prime properties in prime locations.

“A RICS survey uncovered that non-traditional market segments, such as aged care facilities, student housing, data centres and life sciences real estate are yielding the most robust returns. With housing a battleground point in election campaigns, we hope to see an outcome which will deliver new homes, including social housing, however, we expect we will see more short-term fixes. Stimulus will be welcome but can create unnecessary froth. Hints at a stamp duty holiday or reprieve may be a welcome sign for voters. For developers, eased planning regulations for brownfield sites and conversions will be popular. However, all parties are faced with a challenge in their election campaigns – striking a balance between trying to increase housing supply and therefore affordability by supporting developers and private landlords but appealing to voters who do not want to see greenfield development. The planning system remains hotly political and as a result, landlords and developers are unlikely to see much in their favour. As a debt provider, we hope to support the best sites in prime locations with well-capitalised sponsors who understand their product. Following this strategy, we aim to bolster developers’ initiatives with the flexible underwriting approach that is necessary for navigating current planning rules and market uncertainty. This will enable us to continue to offer opportunities for the growing number of private individuals opting to invest in property debt.”

Tom Brown, Managing Director, Real Estate at Ingenious, said: “The resilience and appeal of the UK property sector persist despite higher inflation and sticky borrowing rates. There’s clearly a significant and notable shortage of housing inventory across various price brackets and locations. Consequently, any decline in homeowner sales is likely counterbalanced by increased demand from renters and investors. This is a trend that is not going away. However, it’s crucial to recognise that the situation isn’t consistent nationwide or across different property pricing brackets. It’s helpful to delve into subsectors and regional dynamics when assessing opportunities, as a broad market view can be misleading. In the real estate sector, we’re seeing significant investment capital for assets for long-term rental. On account of their scale and buying power, these typically institutional investors face fewer disruptions than owner occupiers or small-scale Buy-to-let investors. 

 
 

“At Ingenious, we continue to work closely with borrowers and investors, adapting to the dynamic market landscape and broader economic shifts, including those related to the climate crisis and changing lifestyles. We are expanding the reach of our development lending product to provide extended stabilisation terms for specialised developers in the rental sector. Furthermore, we’re introducing special lending terms for developers focused on reducing embedded carbon in their construction practices.”

Karen Noye, mortgage expert at Quilter: “According to Halifax’s latest House Price Index house prices have remained relatively stable with the average house prices in May, down just -0.1%. Broader economic trends are shaping consumer appetite, which in turn are driving this stability but lack of growth. 

“The modest drop still points a resilient housing market and there are several factors contributing to this. Wages have been rising steadily, with average pay increasing by around 6%. This coupled with lower inflation, has boosted consumer confidence, making buyers feel more financially secure. Additionally, unemployment remains relatively low. Therefore, those who can stomach the new affordability criteria in this higher interest rate environment are keeping the market afloat.

 
 

“Labour’s announcement last night of their “freedom to buy” scheme while headline grabbing is unlikely to have any significant impact to the housing market in the short term. In contrast, Labour’s pledge to build 1.5 million homes and overhaul the planning system could initiate far greater change. Addressing the limited housing stock in the UK is the key piece of the puzzle. By increasing the supply of new homes, it will make homeownership more accessible to a broader range of people.

“The “freedom to buy” policy aims to help young people get onto the housing ladder by making the mortgage guarantee scheme a permanent fixture. However, the well-meaning scheme introduced by the Tories, has so far been only marginally impactful.

“Generally, first time buyers can only borrow up to 4.5 times their annual income, meaning those on average salaries can only secure mortgages slightly over £150k, which doesn’t offer much choice in the current market. Often saving for a larger deposit or receiving financial help from family provides more options.

 

“Additionally, high loan to value ratios increases the risk of negative equity, especially if house prices fall. This could leave new homeowners in a difficult position if they need to sell their property, as they would have to cover the negative equity, moving costs, and a new deposit.”Additionally, high loan to value ratios increases the risk of negative equity, especially if house prices fall. This could leave new homeowners in a difficult position if they need to sell their property, as they would have to cover the negative equity, moving costs, and a new deposit.

“Regardless of Labour’s announcements, high mortgage rates continue to be a significant hurdle for lots of people. The European Central Bank’s decision to cut interest rates yesterday may set the trend for the Bank of England but it is still too early to say exactly when we will see the base rate cute.

“The next rate decision is due on the 20th June and even if the rate is not cut if the mood music is that a cut is on the horizon then lenders may feel confident enough to start cutting rates in a bid to drum up business.”

 
 

Iain McKenzie, CEO of The Guild of Property Professionals, comments: “After seeing some volatility in house prices in the spring, it is reassuring to buyers and sellers alike that stability is returning to the market.

“There is now pent-up demand, particularly among first-time buyers who might be sitting on a deposit and waiting for interest rates to fall. 

“Our members are seeing this on the ground, with transactions at their highest levels since early 2023. There has since been a rise in the number of properties on the market, and it’s likely that some buyers had been waiting for better mortgage offers to arrive.

“This elevated supply of housing has provided more choice for buyers, potentially lessening the urgency to buy quickly. Estate agents are reporting a more balanced market where buyers have more negotiating power. 

“However, affordability concerns linger and the cost-of-living crisis is still hindering many renters looking to get on the property ladder. With a shortage of affordable homes and thousands of council houses remaining empty, it would be beneficial to the property market to see a renewed commitment to build more affordable homes.

“There’s widespread speculation of a cut in the next base rate decision scheduled for June 20th, which could further boost buyer confidence and potentially lead to a pick-up in price growth in the latter half of the year.

“The market picture varies considerably across the UK. While some areas in Scotland are experiencing healthy levels of growth, southern cities like Ipswich are facing price declines of up to 3%. 

“There is a clear north-south divide when it comes to house price growth, though it’s worth bearing in mind that parts of the South have seen over a decade of inflated house prices, which have unfortunately priced some out of the market.”

Sam Mitchell, CEO of Purplebricks, said: “It is no surprise that with rates edging up and a date set for the General Election, there is some uncertainty about the housing market. However, as there are no housing “giveaways” or unrealistic policies that can distort people’s expectations, the market seems to be continuing as if it is business as usual. For the housing market, rates edging up actually seems to have created some buyer urgency to get themselves in gear to act sooner rather than later. There are also some relatively new mortgage providers keeping their rates the same and offering more flexible products which is particularly beneficial for first time buyers.

We are seeing the property market continue on its road to recovery, with good stock coming to market and a sharp increase in viewings. What we need in the coming months is for the new government to focus on policy that will help people across the country get on the property ladder, through lower mortgage and interest rates, lower transaction costs, and lower rents.”

Jonathan Hopper, CEO of Garrington Property Finders, comments: “The election has pressed pause on price rises, and many estate agents reported a quieter month for sales in May – a time that is traditionally busy for the market as movers with children househunt in earnest to be in their new home in time for the new school year.

“But while both prices and activity have been meandering, it’s clear there is plenty of pent-up demand from buyers primed and ready to go once the election uncertainty is over.

“While it may not be until August that interest rates start to come down, the current hiatus does favour buyers on balance as the number of homes for sale rises steadily.

“Those pressing on with their plans to move are finding plenty of supply, less competition from other buyers and many sellers willing to discuss a price reduction in return for the certainty of a sale. 

“The plodding equilibrium is unlikely to last. With both the economy and consumer confidence growing again and thousands of would-be buyers primed and ready to jump back into the market when interest rates start coming down, all bets are on for a strong summer rebound if the next few months bring cheaper mortgages and a return to political stability.”

Nicky Stevenson, Managing Director at national estate agent group Fine & Country, comments: “The housing market remains in a state of flux, and May’s nearly static house prices underscores the fluctuating landscape.
 
“The annual rise in house prices are a positive sign of slowly-improving buyer demand as people start to feel more financially secure. With inflation easing, there should soon be more confidence in household budgets, allowing buyers to aim higher for their desired home. Recent transaction figures also revealed a fourth consecutive month-on-month increase in April, with more people seeing sales through to completion. 
 
“For sellers, increased demand for homes means they can hold firm on their asking prices. While this might not be welcome news for buyers – especially first-timers – an anticipated interest rate cut this summer could provide some relief in the coming months. All eyes are on the Bank of England to finally drop the base rate from its current 5.25%, where it has remained since September. 
 
“This week, HSBC increased its fixed mortgage rates, and it’s speculated that other lenders could follow suit as they await this pivotal base rate change. Until then, fluctuations in the housing market are likely to continue as it navigates these conditions. Careful monitoring of market trends will be crucial for both buyers and sellers during this period of uncertainty.”

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