Nationwide August HPI

Though the property market remains in a relatively healthy state for now, there's nowhere near the frenzied activity that has defined the market during the past couple of years. We're typically now seeing just two or three buyers competing for a property rather than two dozen, as was the case this time last year. In some instances, some old-fashioned negotiation between a single buyer and seller is now making a comeback. Whilst there is still a general lack of supply, sellers' expectations are also becoming more reasonable and generally more in line with valuations. The current flattening in the market and greater equilibrium between buyers and sellers is a good thing and in the past month I have had several clients make successful offers after some had been looking and offering unsuccessfully for upwards of 2 years. Arguably the most important element of the housing market is that it remains fluid and functional and - unlike in 2007/8 - as mortgage lending remains abundant, whilst prices may well stagnate or even fall slightly, I am confident that demand will remain and the market will function successfully and perhaps in a more sustainable manner over the coming months. With the general chat around interest rate rises and cost of living crisis, remortgage enquiries are increasing. However, in many cases, these are often people simply eager for information rather than actively looking to sacrifice the remaining term of their historically low rates and incur early repayment charges in return for the longer term stability that the higher current rates may offer.

August has been consistent with most of 2022, with people transacting against a backdrop of rate hikes, slow conveyancing and drawn-out lender processing. Buyers looking for the right property are still looking and taking the view that a mid-3% mortgage rate is still good in terms of longer-term averages. Investors are certainly reappraising their strategies as limited company rates are typically north of 4%, with some tipping into the 5% space. We have certainly noticed a slowdown from overseas buyers who face a double surcharge cost in stamp duty and less attractive interest rates to offset this cost. We believe that house price growth will level out from here, with the lack of housing supply keeping a decline at bay from the inevitable economic jitters and the cost of living crisis. As inflation continues to surge, however, it is likely there will be a real terms drop in the value of property.

I have never known a busier August. We saw the usual summer slowdown in purchase work as there wasn't much new stock coming to market but this is an annual event and estate agents are very busy with new properties hitting in September. It's still very much a sellers' market, though, with demand outstripping supply. What kept us really busy though was remortgage work with customers wanting a new fixed rate to protect against rate rises. Remortgage enquiries through our website were up 227% in August on the previous month alone.

August was busy, with lots of enquiries from clients looking to remortgage. There's a real sense of urgency now after the recent 0.5% hike in the Bank of England base rate. The market is definitely turning in favour of buyers, who are wary of paying over the odds now mortgages, energy and the price of everything else is going through the roof. Unless Truss or Sunak can pull several rabbits out the hat, I don't see anywhere else for house prices to go but down.

We're entering uncharted waters in terms of the economy, so how things play out ultimately is as much luck as judgment. I've personally seen a noticeable reduction in the number of enquiries coming in for people looking at buying property, but many people are keener than ever to review their existing mortgage, so activity is still at the same level in the mortgage market overall. The shift away from property purchase will no doubt have an impact on house price growth, maybe even stalling it completely for a period, but I can't see any widespread falls in house prices as long as mortgages are still available to the majority of potential buyers. If mortgage lenders for some reason constrict mortgage availability, then that may have a negative effect on house prices, as only those with excellent credit scores and larger deposits will be in a position to buy.

August proved to be a busy month, especially on the remortgage front with borrowers keen to fix their mortgage rate. So far, the housing market has remained strong but house price increases are likely to dampen as the cost of living crisis bites. Without a doubt, we face an uncertain future with some predicting mortgage rates unseen for well over a decade.

August is naturally the holiday season, with children off school so it's unusual to see a downturn in activity levels as families are on holiday or entertaining their children, with paperwork and property at the back of their minds. In our eyes, it's too early to tell if the market is changing until further data for September and October become available. However, we will say while stock levels remain as low as they are, it's hard to back the idea that house prices will drop across the UK.

August was the busiest month on record for my business, by some 30% more than the second best ever month. First-time buyers remain out in force and some customers are returning earlier than anticipated for remortgage reviews, willing to pay penalties now to secure today's rates in case of further interest rate raises. I think this is common across the industry at the moment if lenders service levels are anything to go by. I’ve had borrowers revising down the purchase price they are looking at in some cases. This means that those who were looking to purchase for around £300,000 a few months ago are now considering smaller, more energy-efficient homes around £200k. Paradoxically this could mean more people competing for properties at lower price points, increasing the prices at the lower end of the ladder more than the higher, making it yet harder still for first time buyers without access to the Bank of Mum and Dad. There’s no one market for housing in the UK. It varies by location and property type and size so different buyers and sellers can go through completely different experiences depending on their circumstances.

As usual, August did show a slight dip in activity due to borrowers, brokers, lenders and solicitors alike being on holiday or away from their desks looking after children during the school holidays. We see a decline in applications and completions every August. Although we have a cost of living crisis which would usually bring the market down, this has been counteracted by so many people rushing to mortgages to avoid the higher rates which are being predicted for the end of the year and 2023. All areas of the market are still active. I think we will see a slowdown of price growth, there was a lot of talk about property prices crashing as interest rates rose but we have yet to see that and based on the what the last 6 months have show us ( increasing rates and still a growing property market) I now no longer think a crash is coming. I do think price growth will slow however but in comparison to the massive boom we have had in the last 2 years I do not think this is anything to worry about but rather it will just return to the growth level we saw prior to 2021. I do think lack of stock will help as I think new build especially those from smaller developments are going to become increasingly far and few between. The cost of materials is getting so high and with labour costs increasing due to the cost of living it's almost becoming not worth while to build a house in this economy. We are still most definitely in a sellers market.