Halifax House Price Index

The housing market seems a bit less frantic but it's still very buoyant with house prices continuing to rise, of not at the same pace. The prospect of an impending crash or bursting of the bubble may make good headlines but is detached from reality. There are significantly fewer properties than would-be buyers who want them and the alternative for many is renting. If you think supply in the sales market is bad, rents are skyrocketing and supply in rentals is even scarcer. All this drives ever more people to try to buy a limited amount of housing stock, which will support prices whatever happens.

I believe house prices will fall by 5% this year and possibly even more in 2023. Property prices are already coming off their record highs and transaction levels are falling. Mortgage costs, fuel, food, and energy prices continue to soar with no end in sight. Throw in National Insurance and tax hikes, the terrible events unfolding in Ukraine, and the autumn energy cap increase and it's a recipe for economic disaster that we won't see the full effects of until the winter. And with a quarter of government debt payments linked to the inflation rate, it's highly doubtful the government has the financial wriggle-room to increase mitigation measures significantly. There is nowhere for house prices to go but down.

Activity in the housing market does seem to be dropping, as inflation hits confidence and wallets. Sellers are becoming increasingly flexible with price and we have seen some scrambling to the auction house to sell their properties before the expected crash. If lenders are being more cautious and factoring in higher living costs, we are not seeing that yet. I think this is something lenders really need to make a priority especially on high loan to value residential mortgages to avoid another repossession crisis. Property prices look set to drop off, especially if the jobs market starts to creak. Demand may, however, be propped up by overseas investors purchasing properties to let out. All I can see is there becoming a larger increase in the ratio of those renting compared to those owning their own residential properties. By the end of the year, I expect house prices to revert to what they were pre-Covid, with potentially a further decline in 2023.

Right now, the market is still really strong and there are plenty of buyers for each property. In some occasions we have had over 20 viewings for one property in less than 24 hours. It is certainly still a sellers’ market. Vendors are holding out for their price and more often than not, they are achieving the asking price or offers over. Lenders are always cautious but no more than normal. Purchasers who are on a good salary, with at least a 5% deposit are having no issues with finance at the moment. As there is a still a shortage of houses generally, the demand will remain strong even if economic conditions worsen. I think that prices at the end of the year will be similar to how they are now as demand is still so strong.

Though we are still seeing strong demand for our live properties, during the second half of the year our data and projected sales start to flatline as the cost of living crisis bites and buyers become cautious of making the wrong move at the wrong time. Serious, pre-qualified buyers are still keen to complete and are willing to match that desire with strong offers, as much as 5% above asking price. The number of serious buyers does seem to be dwindling though, along with the number of window shopping 'maybe' buyers. Lenders are not only being more cautious but stock levels are dwindling even further. If the jobs market starts to weaken, we are likely to see an impact across the full spectrum of transactions from first time buyers to downsizers. We feel there may be a potential reduction of 10% to 15% in house prices for second hand transactions, particularly at the higher end of the market as the impact of the cost of living crisis and shaky jobs market create uncertainty and fear. New build property prices are likely to stabilise and stay at current levels as supply remains low in a post pandemic environment."