Property market resilient amid rising rates, but slowdown is clear

Myron Jobson comments on the latest Halifax House Price Index.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Halifax’s latest house price index shows the property market remains resilient as a double whammy of rampant inflation and rising interest rates continues to squeeze affordability. But it remains clear as day that a slowdown in the housing market is it at play.

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“There has been a comedown from heady double-digit house price growth, with prices slowing to 1.6% in March on an annual basis according to Halifax’s study. Meanwhile, Nationwide reports that house price growth reversed in March, down 3.1% year-on-year - the largest annual decline since July 2009.

“The conflicting assessments is symptomatic of a hiccupping market that is adjusting to a come down from the blistering pace of house price growth over the past few years.

“The reality is there is a collection of micro-markets at play. There are still regions where gazumping and bidding wars are rife, and the opposite is true in other parts of the nation. Estate agents have reported that a lack of supply in larger property have kept prices inflated, as the race for space theme continues to play out.

“The recent fall in mortgage rates, with lenders seemingly engaged in a mortgage price war, and a strong labour market, with unemployment at a near record low, has helped keep prices elevated. But there is mounting evidence that the housing market is seemingly in a pendulum moment — swinging back in a buyer’s market direction.

“Home inventory is starting to increase and there are regions where sellers are accepting huge discounts on asking prices, to get sales over the line as the property market cools down.

“The housing market is off to a slow start this year, but the crucial spring buying season could give us a clear indication of the state of the property market. In spring, home prices tend to rise due to increased seasonal demand, but current indicators do not signal that the season will be a robust one.”