UK housing market is 'kaput', brokers claim

UK housing market is 'kaput', brokers claim
Photo: Darya Sannikova via Pexels

Britain's housing market is broken and the property bull market could soon turn into a bear, mortgage advisers have warned.

Rhys Schofield, managing director at Belper-based Peak Mortgages and Protection: “House prices may have edged down slightly but they're still frighteningly high. The property market is broken, kaput."

Samuel Gee, director at Bristol-based Manning Gee Investments, said: "The cost of living crisis will only exacerbate this problem, as lenders will be more careful when taking longer term affordability into account.

"Something somewhere will have to give and interest rate rises could turn the current property bull market into a bear."

Drawing on a popular analogy, Lewis Shaw, founder of Mansfield-based Shaw Financial Services, prophesied: "Winter is coming, to quote the Game of Thrones.

"I warned 12 months ago that we had a nasty recession coming down the tracks due to the impacts of Covid and Brexit. Nevertheless, prices kept rising and mortgage balances grew with a frenzy of activity.

"Now we're about to reap what a lot of people have sown, and it's going to get very ugly indeed - and this is before Ukraine was factored in."

Their comments came after the Land Registry HPI and Index of Private Housing Rental Prices were published at the end of March, and showed persistent increases in the average purchase price: 

  • On average, house prices have risen 0.4 per cent since December 2021.
  • There has been an annual price rise of 9.6 per cent.
  • This makes the average property in the UK valued at £273,762.

Brokers said they were concerned that the rising cost of living, coupled with incrementally rising house prices, would push consumers to the brink.

But the real problem is the lack of supply to meet the demand for affordable accommodation - both for rental and residential purchases. 

Gee added: "There is an unprecedented lack of stock currently, with buyers competing intensely for whatever comes to market. It's an unsustainable situation with first-time buyers simply priced out of the market."

Scholfield added: "There are more buyers than houses and any increases in interest rates is merely tinkering round the edges as it doesn't solve the issue around the lack of supply.

"The alternative to buying is renting but when rents are going up even faster, the lack of property becomes a real issue.

"It's all very well house prices going up but those fortunate enough to be on the property ladder are leaving a heck of a lot of people behind."

In the 2004 Barker Review of housing in the UK, the lack of housing was highlighted, calling for 200,000 homes to be built a year.

But there is still a shortage in supply of housing, and the market has not yet recovered from the effects of the credit crisis in 2008 to 2009 and again in 2009 to 2010, when there were significant year-on-year slumps in houses built.

They warned all these issues were converging to create "pressures" on the housing market which, according to estate agents, are becoming all too clear.