Runaway UK housing market showing strong signs of a slowdown
17th August 2022 11:14
by Myron Jobson from interactive investor
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interactive investor comments on ONS House Price Index figures.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The runaway housing market has finally started to show strong signs of a slowdown, with average house prices up 7.8% over the year to June 2022, down from 12.8% in May.
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“While house prices have maintained a surprising degree of momentum, the distortions of the stamp duty holiday have created a misleading image of the housing market. Mounting pressure on budgets from ballooning inflation and big rises in new mortgage rates appear to be applying the brakes to the market. Recent data from the Royal Institution of Chartered Surveyors revealed new buyer enquiries fell for the third month in a row in July, representing the longest stretch of falling buyer demand since the start of the pandemic - suggesting that demand for homes isn’t as strong as affordability pressures mount.
“Skyrocketing house prices are likely to feel the pull of gravity from the escalating cost-of-living crunch come autumn, with the impending rise to the energy price cap set to further fuel inflation and the spectre of higher interest rates to combat rising prices upping borrowing costs.
“Fast-rising rents, up 3.2% in the 12 months to July 2022, are not offering any relief and could keep some wannabe homeowners in the hunt for a home for longer than they would like.”
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