With the recent release of the Halifax House Price Index data, announcing that House prices fell by -0.4% in May vs rise of +0.3% in April, Industry names have been sharing their thoughts on what this means for the property sector.
Holly Tomlinson, financial planner at Quilter:
“The latest Halifax House Price Index shows that UK house prices fell by 0.4% in May, with the average property now valued at £296,648. However, prices were still up by 2.5% compared to this time last year, suggesting that while activity has slowed, the market remains surprisingly robust.
Following the end of the temporary stamp duty thresholds in April, the housing market saw a clear shift in momentum. Buyers rushed to complete transactions in March to avoid higher tax bills, but activity cooled noticeably in April, as shown by the Bank of England’s latest mortgage approval figures. Despite this drop in demand, house prices have not fallen off a cliff.
The fact that prices fell only modestly in May indicates that supply remains constrained and sellers have not yet been forced to adjust their expectations. However, with affordability still stretched and borrowing costs relatively high, the risk of a more prolonged slowdown cannot be ignored.
Mortgage rates are edging down slightly , but for many buyers, this remains a far cry from the ultra-low rates of recent years. For those coming to the end of a fixed deal, the jump in monthly repayments can be significant, adding to the financial strain.
Looking ahead, market confidence will likely hinge on the timing and pace of interest rate cuts. A more meaningful pick-up in buyer demand may not materialise until there is clearer evidence that mortgage costs are on a sustained downward path. For now, the market appears to be pausing for breath after a frenetic start to the year.”
Nathan Emerson, CEO of Propertymark, comments:
“This slight dip in house prices will likely have been influenced as a direct consequence to the current state of the global economy. There will always be a need for people to move house regardless of international trading relations; however, many aspiring or current homeowners will no doubt be discouraged until they feel confident in their long-term affordability.
It would be very welcome news for consumers if lenders do feel confident enough to offer additional competitive mortgage products across the summer months, but much will depend on the rate of inflation across the coming months.”
Commenting on UK house prices showing an annual rate of growth of 2.5% according to Halifax data, Tom Brown, Managing Director, Real Estate at Ingenious, said: “Today’s data underscores the continued resilience and appeal of the UK property sector. Despite elevated inflation and stubborn borrowing costs, we welcome the BoE’s recent rate cut as a hopeful first step in a much-needed easing cycle.
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.”
