House price growth slows as industry fears buyer slump

In April, the market saw annual price growth reach 12.1 per cent.

The slight drop in growth means the average price of a house now sits at £269,914, according to Nationwide’s latest house price index published today (June 1). This was a result of prices edging up by 0.9 per cent month-on-month.

The housing market could start to dramatically change with a lack of new people considering moving.Jamie Lennox, Dimora Mortgages

Nationwide’s chief economist, Robert Gardner, said May was the tenth successive monthly increase for prices, which kept annual price growth in double digits despite it slowing.

But some have heeded the slowing market as a sign of a slow in new home buyer appetite. 

Norwich-based mortgage broker at Dimora Mortgages, Jamie Lennox, said the market “could start to dramatically change”.

“The tide could be turning as a number of clients who have been house hunting for the past six months are now finally getting offers accepted where, before, they were consistently being outbid by other buyers,” said Lennox.

“A lot of buyers currently are committed to the idea of moving but once they finally complete we believe the housing market could start to dramatically change with a lack of new people considering moving.”

Buyer enthusiasm for a competitive-bidding bun fight appears to be waning. Alex Lyle, Antony Roberts estate agency

Lennox added that prices in Norfolk, like much of the country, have so far remained resilient in the face of rising interest rates and inflation due to an “extreme” lack of stock in the area as the imbalance between supply and demand continues to hold up houses’ values.

Director at Richmond estate agency Antony Roberts, Alex Lyle, reckons it is getting more difficult to call the market ­– though on the ground, he said it feels as though activity has slowed a little over the past few weeks.

He put this down to a lack of stock, combined with various bank holidays and half terms, rather than solely down to rising interest rates and inflation. 

“Such little stock is coming onto the market, while buyer enthusiasm for a competitive-bidding bun fight appears to be waning,” said Lyle.

“Some down-valuations are also beginning to creep in, which we haven’t seen for quite a while.” 

Some brokers warned of properties being valued less than expected back in October 2020. But some have reported more instances of down-valuations in recent months.

‘Sharp knockout blow’ to transactions

Some fear the reduced appetite to buy a home could have a serious impact on property transaction figures this year.

Managing director at London-based property developer New Place Associates, Joe Garner, said despite the cost of living crisis, his firm’s analysis of the market points to a 'panic buy' situation later in the year.

He put this down to the looming Help to Buy application deadline in October - which was cut short by the government from December last month.

What will follow, Garner said, will be a stagnation in sales prices coupled with a significant cost increase in private rental rates. 

“The Kafkaesque bureaucracy of the mortgage application approval process, coupled with overloaded solicitors and nervous valuation surveyors, could result in a quick, sharp knockout blow to property transactions in the UK,” he said.

Some are more measured in their analysis. Director of Altrincham-based Simple Fast Mortgage, Rob Peters, said he would expect a property slowdown in the coming months, but does not think the UK housing market has a potent enough mix of disastrous ingredients at this point for a full blown property recession. 

“Property buying activity will continue to be driven by lack of houses and the British public's will to own bricks and mortar of their own,” said Peters.

“While the dream of purchasing a home may move further into the distance for first-time buyers, and those in a weaker financial position, there are presently sufficient buyers in a strong financial position to take their place.”

ruby.hinchliffe@ft.com