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UK HOUSE PRICE INDEX AUGUST 2022

ended 19. October 2022

This morning (Wednesday 19th October) at 0930 the latest UK House Price Index August 2022 from the ONS will be published. Here's a few questions for you. 

The ONS is also publishing its Index of Private Housing Rental Prices. So, there's a couple of questions on rental prices at the end as well.

 Answer any or all of the questions but please don't write an essay. Any other thoughts, as ever jot them down.

  • With interest (and mortgage) rates almost certainly set to rise higher, are house prices going to fall, or will the lack of supply mean we're more likely to see a reduced rate of growth, or a flatline?
  • Could we see a property market crash, and if so, how far could prices fall in percentage terms? Do you think the London market will suffer more or less than other regional markets?
  • What do you see happening to the property market between now and Crimbo? And how will the market fare in 2023? Is demand going to drop off as people sit on their hands amid all the economic uncertainty?
  • The stamp duty cut survived Jeremy Hunt's axe. Will this help fuel first time buyer demand,  or will predicted further interest rate (and mortgage rate) rises stiffle demand?
  • Is it a buyer's market, or a seller's market right now?
  • Do you think we're going to see a rise in the number of forced sales, as highly leveraged borrowers come to the end of their low fixed rate deals and find themselves staring down the barrel of a 5%+ mortgage?
  • Do you think we will see an increase in property sales/chains collapsing over the coming months and why?  Eg. lenders are pulling mortgage offers, mortgage offers are running out because sales are taking too long to complete, and the rates on new offers are too high?
  • How are rising buy-to-let mortgages affecting landlords, and particularly amateur landlords?
  • Will we see more landlords - particularly amateur/accidental landlords - forced to sell up or inflict huge rent rises on their tenants?
  • Are there likely to be landlords forced to absorb higher buy-to-let mortgage costs, because they don't want to raise rents at a time when people are struggling with the Cost of Living crisis?
  • Are we likely to see fewer buy-to-let investors entering the market over the next 12 months? And what impact will this have on the rental market overall in terms of supply and demand?
  • Are more tenants getting behind with their rental payments?
  • How will the rental market look over the next 12 months? It would be good to get an expert view


 

2 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
We’ve seen a significant slow down in house price growth in August, falling from 16% to 13.6%. This will be a combination of factors including conveyancers pushing through transactions before changes to stamp duty rules in July, artificially inflating last months numbers. However, the elephant in the room is the state of the government and the state of the economy. Both of these will have a significant impact on confidence that will affect prices. The average house price was now nearly £300,000. With interest rates heading to eye watering numbers, these prices just aren’t sustainable for first time buyers and young families. The bottom is going to fall out of the market at some point soon. Christmas will be a yard stick for transaction numbers and prices. It’s not going to be long before these pressure filter through to the ONS numbers, probably as soon as next month (Septembers figures). I would expect regional disparity in 2023, with most of the Uk seeing a fall in prices of up to 10%. The national picture might not seem too bad as London prices could hold up as the government has trashed the currency and luxury property could look cheap to foreign buyers. The buy to let market will dry up too. Landlords aren’t seeing this net yield after mortgage payments as a worthwhile investment and until prices fall, developers won’t see value in projects ad finance costs will erode their return. It’s a very very gloomy picture. Rents are likely to increase at a time of pressurised real incomes that will push a lot of people into absolute poverty. Landlords will justify their rental increase on increased mortgage costs and general inflation. For those on low incomes this will be catastrophic. The sooner the government can get a grip on inflation the better for everyone, especially those struggling the most.
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Rob Gill
Managing Director at Altura Mortgage Finance
If mortgage rates remain at current levels, there's every chance of a buyers' strike as potential buyers calculate that their mortgage payments at 6% are higher than they're willing and able to pay. The current imbalance between supply and demand could then flip completely and a substantial correction in house prices could be on the cards. Our base case assumption is a sustained period of mortgage rates of 6% or higher will lead to a fall in property prices of 15%. For this reason alone, there's every chance the government will continue doing everything possible to settle down financial markets to bring down mortgage rates. If sacking the Chancellor and cancelling the mini-Budget doesn't prove enough, then more seems bound to follow.