House price growth slowed to 11.2 per cent in May, prompting some in the industry to foresee a lack of new home buyers and a “sharp knockout blow” to property transactions in the coming months.
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.
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.”
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.