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Land Registry April HPI: “A house price crash seems inevitable at this point” – reaction from property experts

by | Jun 21, 2023

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Following the Land Registry April House Price Index published this morning, property experts have been sharing their reaction to the news and also what the implications are for the property market as follows:

Jamie Elvin, director at Brighton-based Strive Mortgages:

“Following the dire inflation data published on Wednesday, the future for the property market feels very uncertain. Expect the base rate to rise to 5.5% or 5.75% by the end of the year, potentially even higher. I fear for the property market, and a house price crash seems inevitable at this point. We have a ticking time bomb where 1.4m borrowers will see an end to their low fixed rates this year, and the impact will be devastating.”

 
 

Bob Singh of Uxbridge-based mortgage broker, Chess Mortgages:

“This latest house price data shows the ongoing pressure the property market is under, and doesn’t even reflect the mortgage market mayhem of the past month or so. A base rate increase of 0.5% on Thursday now looks like a nailed-on certainty and this will add to the recent volatility we have been seeing in the mortgage market. It will also likely put downward pressure on the demand for property, and therefore house prices.”

Lewis Shaw, founder of Mansfield-based Shaw Financial Services:

 

“After Wednesday’s inflation data, the Bank of England will be under enormous pressure to hike rates tomorrow, almost certainly by 50 basis points. The knock-on effect is that mortgage rates will continue to soar and the pain for households will intensify. With mortgage rates already at the most painful level since the 90s, we can expect a slowdown in the property market and house prices are now well and truly in the crosshairs.”

Gareth Davies, director at Southampton-based broker, South Coast Mortgage Services:

“With inflation proving more stubborn than first thought, it’s nailed-on that the base rate will increase once again on Thursday, which will clearly impact the property market and potentially weaken demand. Mortgage brokers feel like the grim reaper right now. We are constantly having to tell people that their biggest debt is about to jump by hundred of pounds or more a month, and there’s little anyone can do about it.”

 
 

Gary Bush, financial adviser at the Potters Bar-based MortgageShop.com:

“This latest inflation figure is terrible news for us all and sadly will start another mortgage rate crisis for at least the next month. We expect the Bank of England Monetary Policy Committee to increase the base rate at lunchtime tomorrow by at least 0.5%, leading mortgage applicants onto very tricky ground. However, while the market will slow, I don’t think house prices are likely to crash with the continued shortage of decent properties on the market.”

Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com:

 
 

“House prices continue to fall and I’m expecting them to fall even more sharply over the coming months. It’s a mathematical certainty now. Monthly drops of 1%-2% will become the norm. Extrapolate that out and we could easily see an annual decrease of 15% between now and next summer, perhaps 25% to summer 2025. And that’s nominal prices. Adjusted for inflation, real price falls will be much greater.”

Ross McMillan, owner at Glasgow-based Blue Fish Mortgage Solutions:

As the disappointing data from different sources is now beginning to collide, it feels like the thundery storms we have seen recently weather-wise are now inevitably going to hit the property market as well. The hope is that the deluge of negative data will be as similarly short-lived as the summer storms, but it would seem unlikely that they can be avoided over the next couple of months.

 

However, despite the volatility, uncertainty and slight smell of fear that is permeating the UK currently, regional discrepancies and imbalances in performance will persist. With the imbalance between supply and demand still a key factor in the Scottish property market at least, a flatter rather than falling market is the more likely outcome for the remainder of 2023.”

 Nicky Stevenson, Managing Director at national estate agent group Fine & Country:

 “The housing market has been incredibly resilient, but mortgage rate pressures are putting a damper on price growth. Despite this, the market remains strong, with buyers benefiting from rising stock levels and incentivised by the prospect of negotiating a good deal on their next home. Agreed sales at the end of May reached their highest level of the year so far, up 11% on the five-year average on the same period. 

 
 

“However, there are some potentially darker clouds on the horizon as mortgage products are being pulled and the banks and borrowers are on tenterhooks awaiting the Bank of England base rate decision this week. People have got more used to the higher interest rate environment, but we could see further downward pressure placed on house prices if 6% fixed rates remain the norm.”

Riccardo Tessaro, Co-Founder & CEO of flexible co-living brand Gravity Co:

“Thousands of tenants find themselves caught between soaring prices and the interest rate hikes designed to tame them. Rising interest rates have driven up landlords’ mortgage costs, which they are passing onto tenants in the form of escalating rents. They’ve also prompted some private landlords to exit the rental sector altogether, reducing the number of available properties and sparking intense competition among renters. 

 
 

“In some cases, this mismatch in supply and demand is forcing would-be tenants to gazump each other to secure a place to live — and this is driving up rents even faster. The problem is particularly acute in London, where average rents rose by 5.1% over the year to May, demonstrating the desperate need for more rental homes in the capital. We have seen increasing demand for studios and 1-bed flats, and more of these properties need to be added to developers’ pipelines.” 

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