National July HPI: “The real estate market has once again defied economic gravity” – agents and brokers react

Following the National House Price Index for July published this morning, agents and brokers reacted:

Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco: “The real estate market has once again defied economic gravity, with the lack of supply and the robust job market undoubtedly the main drivers. Going forward, the resilience of the labor market will be essential. the recession that many are predicting sees unemployment rise sharply, the real estate market will invariably take a hit.Even then, however, the impact on prices will be limited due to the severe lack of supply and construction of homes. lack of supply is the real estate market’s wild card, which it always plays when the game goes against it.Even if annual price growth is still in double digits, this is unlikely to continue for much longer as the The era of cheap money is well and truly over and the cost of living crisis is undermining market confidence.

Ross Boyd, founder of the still-active mortgage comparison platform, ‘It’s no surprise that landlords hold their heads high as they know rents are likely to rise even further as people struggle to buy and also view property as long-term protection against the downside. inflation. As for the continued strength of the market, with double-digit inflation and rising rates, potentially strong again this week, we are in economic crisis mode and the real estate market will not come out unscathed. Many are forecasting a 0.5% rate hike this week as the Bank of England tries to control inflation, which will further dampen demand, slowing the rate of price growth. We expect the housing market to continue to cool through 2022 and into 2023. For people who are currently locked in some of the lowest mortgage rates ever, the rate shock as they repay will be extreme. The impending mortgage crisis will significantly increase the cost of living crisis and put additional pressure on household finances.

James Miles, director of the Exeter-based brokerage, The Mortgage District: “Prices are rising largely because owners and investors see rising rental prices and the potential for growth in the vacation rental industry. More generally, I would expect house prices to stabilize but not fall due to lack of supply. We still find that the apps work well despite the holiday season among us. The biggest challenge is the chasm in the difference between buyers’ incomes and property values ​​and the income multiples that lenders use are not sufficient. There is also a huge unknown in the cost of living on things like energy bills and rising interest rates.

Mark Robinson, Southampton chief executive Albion Forest Mortgages: “With such limited supply, I expect property prices to continue to rise over the next 12 months, although much more gradually than in previous years. We are still seeing a decent level of supply of mortgages, so people are definitely still buying. The bottom line is that even in the midst of the cost of living crisis and with a potential recession looming, people will still need to move for a variety of reasons, and it’s still usually cheaper to buy than to rent.Deposits, as always, are essential, so it’s no surprise that Mom and Dad’s Bank is currently working overtime.

Edward Checkley, managing director of London-based property finance specialists, Notice: This continued strength in the market is not surprising given that the housing stock deficit remains an ongoing problem. Although rising interest rates are tempering buyer enthusiasm, in historical terms, borrowing costs still represent reasonable value. Looking forward to 2023, if inflation remains high and interest rates continue to rise, property values ​​may correct to offset the additional financial costs. We could see short-term corrections in regions, where buyers have been scrambling for idyllic properties and areas during the pandemic. An offsetting factor for the market in general may be the relatively weak pound and London’s international appeal, which may attract foreign property investment to the capital.

Jamie Lennox, director of the Norwich-based mortgage broker, Dimora Mortgages: “While July continued to see strong demand for mortgages, activity levels are definitely starting to drop. When speaking to local agents, they are seeing fewer listings coming to market which could be due to the cost of living crisis or the fact that we are now heading into the holiday season.A recession does not automatically mean that property prices are collapsing.However, much will depend on the willingness of mortgage lenders to lend in potentially tough economic conditions. If they stay as they are, I feel the market will stabilize. If lenders become more restrictive, we could see prices come down. Ultimately, that’s a flip side about what can happen from here.

Lewis Shaw, founder of Mansfield Shaw Financial Services: “July was noticeably quieter, although that is to be expected with schools closed and families on holiday. August will be the same, allowing for a brief respite before the market picks up again in As a result, prices will stop rising, and with the Bank of England almost certainly raising the base rate by another 0.5% on Thursday, this will certainly dampen demand for new borrowing. to a collapse in house prices because we have such a chronic shortage of housing stock and bank liquidity is always good. England continues to raise rates, however unless we see unemployment soaring, the housing market will continue to be resilient.

Graham Cox, founder of the Bristol-based broker, “The Bank of England base rate could be around 3% by the end of the year. Mortgage rates, if this happens, will be around 5%. This will be catastrophic for anyone coming from a fixed rate and needing to remortgage. For years, ultra-low rates have masked the economic reality of an over-indebted nation and a Ponzi-style housing market. I think prices are about to drop, and quickly, maybe 5-10% over the next 12 months. »

Rhys Schofield, Managing Director of Belper Advanced mortgages and protection: “A well-known fact among industry professionals is that when the weather is nice, no one bothers to buy a house. That being said, July has been another very busy month and I expect to see further upside in house prices. Some sectors of society love to talk about the prospect of a crash, but the reality is that demand is fierce, transactions are still up from pre-pandemic levels and the alternative to buying is renting where the shortage is. of stock and rent is even more pronounced. the increases overshadow what is happening with the purchase prices.

Rob Peters, Director of Altrincham Quick and easy mortgage loan: “With inflation at its highest level in four decades and a growing cost of living crisis, the chances of a recession in the UK seem quite high. crash. In fact, a crash is fairly unlikely. Instead, house price growth should level off. The runaway house price growth of recent years simply cannot be sustained. Yet , at the same time, there remains strong demand for housing. Buyers in weaker financial positions will be replaced by those in stronger positions, and the show will continue. The Great Recession of 2008-2009 was linked to a mortgage crisis at risk in the United States and poor regulation regarding the stability of the banking sector.This is simply not the case today.

Sabrina Hall of Lichfield Kind financial services: “The market is still strong, but it looks like we are seeing the end of the madness of one property getting 20-30 views and leading to a bidding war. Despite the cost of living crisis and restrictions on affordability , I still see a lot of demand from homebuyers and that doesn’t seem to have deterred buyers so far, which will help keep the mortgage market from crashing. by the end of the year, we are on track to see a correction of the boom that happened during Covid.

Andrew Simmonds, Bristol manager Parker’s Realtors: “We’re seeing more stocks entering the market than we’ve seen in the past 12 months, but buyers are now retracting a bit into their shells. The rest of 2022 will be interesting. I certainly don’t see the same growth as previous years, perhaps fairly static values ​​and certainly not falling prices, at least for now.