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Nationwide May 23 House Price Index

ended 31. May 2023

Tomorrow morning at 07:00, the Nationwide May House Price Index is being published. As ever, this will get a lot of pick-up in the local, national and trade media so a handful of Qs:

  • In your experience, how strong was demand for residential property in May?
  • Were any specific sub-sectors particularly active or quiet, e.g. FTBs, landlords, home movers?
  • What do you expect to happen to the UK property market during the rest of 2023?
  • The mortgage market has been upended by last week's inflation data, with lenders withdrawing and/or increasing rates across the board. How could this impact demand moving forward?
  • What will happen to average values and demand if the base rate rises to 5% or above?

Any other thoughts, jot them down.

5 responses from the Newspage community

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Rohit Kohli
Director at The Mortgage Stop
In May, the market displayed signs of recovery, with a surge in enquiries and a return of buy-to-let investors due to improved stress tests and rates. Of course, the market overall is still fairly muted compared to last year. Current conditions have made landlords cautious, questioning the viability of property investments even when stress tests are passed. As we look towards the rest of 2023, we face an uncertain period. The long wait until the next Bank of England interest rate meeting on 22 June could fuel speculation and promote caution on the ground. Last week's upheaval in the mortgage market may compound this, with increased borrowing costs possibly discouraging potential buyers, slowing the market further. If the base rate rises to 5% or more, the impact could be significant. Higher costs could reduce affordability, potentially suppressing activity and lowering house prices. This could also increase arrears and repossessions as homeowners shift into higher payments.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
Last week's inflation data rattled the mortgage market, prompting lenders to withdraw and increase rates across the board. This will have a profound impact on demand, affordability and the overall dynamics of the market for the rest of 2023. Uncertainty surrounding inflation, interest rates, and the economy will temper buyer sentiment. This latest disruption in the mortgage market, with higher borrowing costs and reduced access to financing, will deter potential buyers and place even more emphasis on affordability, which means borrowers are likely to have to put in larger deposits. This makes the market tougher for first-time buyers and less attractive for investors. The one thing we can all be certain of is that while house price growth will slow down in 2023, house prices will continue their steady climb up given the intrinsic demand in our economy and entrenched lack of supply. We continue to remain bullish.
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Graham Cox
Director at Bridging Hub
May opened strongly, but the market has cooled noticeably since last week's inflation figures were released. Despite the mixed signals from Nationwide and Halifax, property prices are falling, as evidenced by the Land Registry figures reporting five consecutive months of decreasing prices. Equally, transactions in April this year were down a quarter on April 22. So demand is falling as supply is increasing due to the spring rush. Property prices are likely to start falling more sharply between now and the end of the year, especially once it becomes clear prices are indeed, dropping. That will cause buyers to hold off in the expectation of further falls.
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Ross McMillan
Owner/Mortgage Advisor at Blue Fish Mortgage Solutions
With almost as many bank holidays as rate rises, May was a distinctly peculiar month which, after a fairly encouraging start, swerved fairly violently in the past week or so from relative stability to wild instability within the blink of an eye. How this recent shock to borrowers' system impacts the overall housing market in the immediate term is still difficult to gauge but anecdotally, appetite from first-time buyers in particular remains stubbornly strong thus far. Specifically in Scotland, seemingly across most areas, there has been no real sign of any significant fall in prices and, whilst the number of buyers may be less overall, a percentage above the home report value remains the expected norm. Ongoing turmoil and uncertainty around rates and availability of products is, however, a hammer blow to any thoughts of recovery in the buy-to-let sector, which now seems set for a long period on the naughty step whilst lenders and investors consider their next moves.
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Oliver Fish
Director at Oliver & Co
May saw a lot of activity in Central London with international buyers in particular HNW buyers from the Middle East who are coming to London in big numbers as they certainly want to take advantage of the recent softening of the market and invest here securely for the long term. We've seen landlords selling up their rental properties as the BTL market becomes less attractive to investors with the cost of borrowing and increased legislation. Buyers that require borrowing are having to look in a lower price range due to the increase in mortgage costs. I expect mortgage rates may well go up further in the region of 0.25%, house prices to stabilise over the coming months and confidence to slowly creep back as we adapt to this an even more expensive rate environment. My guess is that over the next couple of years the base rate will come down, better mortgage deals will appear and property will start heading the way it always does, namely up.