House prices in the UK have risen for the 12th successive month, with annual price growth also remaining in double digits. The market has been described as retaining a “surprising degree of momentum” for a housing market that has battled with high inflation and increasing borrowing costs over the previous months. This comes as Zoopla have also recorded a rise, as well as predicting a 5% increase before the end of the year.
According to Nationwide’s latest House Price Index, prices moved from an average of £271,613 to £271,209 – a rise of 0.1% taking account of seasonal effects. Annual growth sat at 11.0%, a slight rise from 10.7% in April.
“The housing market has retained a surprising degree of momentum given the mounting pressures on household budgets from high inflation, which has already driven consumer confidence to all-time lows. While there are tentative signs of a slowdown in activity, with a dip in the number of mortgage approvals for house purchases in June, this has yet to feed through to price growth,” said Robert Gardner, Nationwide’s Chief Economist. He added:
“Demand continues to be supported by strong labour market conditions, where the unemployment rate remains near 50-year lows and with the number of job vacancies close to record highs. At the same time, the limited stock of homes on the market has helped keep upward pressure on house prices.”
Gardner did add that Nationwide expect the market to slow over the rest of the year as households deal with double-digit inflation and rising borrowing costs. Gardner concluded:
“We continue to expect the market to slow as pressure on household budgets intensifies in the coming quarters, with inflation set to reach double digits towards the end of the year. Moreover, the Bank of England is widely expected to raise interest rates further, which will also exert a cooling impact on the market if this feeds through to mortgage rates.”
Gardner’s mixed opinion of the market was reflected in Zoopla’s latest housing market forecast. Though house prices are still rising than the five-year average, Zoopla say that prices slowed down in spring. They do, however, predict a substantial 5% rise over the rest of 2022. They said:
“Homeowners are not immune to the pending economic headwinds. There are signs that the recent strength of the market will weaken in the next few months.
We’re all feeling cost of living pressures, rising mortgage rates and a squeeze on disposable income. These factors will all impact homeowners’ desire to move, which will become apparent later in 2022 and into the first half of 2023.”
Cautious optimism was offered by Anthony Codling, CEO of twindig:
“It seems that house prices have not read the memo on the cost of living crisis. Transactions are starting to slow, but house prices are still on the up as the pandemic boosted savings, low unemployment and a limited number of homes for sale continue to drive house price growth. What next for house prices? In a summer punctuated by strikes resolved by wage increases, and relaxed mortgage stress tests house prices may continue to rise for the foreseeable future.”
James Forrester, Managing Director of estate agency Barrows and Forrester, referred to the “resilience of UK bricks and mortar” in light of the continued growth:
“A twelfth consecutive monthly increase and yet another double-digit rate of house price growth is quite remarkable in itself, but against the current backdrop of economic uncertainty it really does demonstrate the resilience of UK bricks and mortar.
Market momentum remains unwavering, having weathered a prolonged period of Brexit uncertainty, a global pandemic, increasing inflation and the most incompetent prime minister in living memory.
All things considered, it seems as though nothing short of an apocalypse can bring the property market to its knees.”
Director of Henry Dannell, Geoff Garrett, was less positive, insisting that the cost of living, cost of borrowing, and inflation will all inevitably take their toll:
“A combination of rising mortgage rates, inflation and the increased cost of living have already started to cool the property market where buyer appetites in the form of mortgage approvals are concerned.
Although this is yet to filter through to top line house price growth, it’s inevitable that these headwinds will eventually impact the price buyers are willing to pay.”
