“A whiff of yesterday’s news” - agent plays down rocketing house prices

One of the country’s leading estate agents has played down the significance of the latest house price index which at first sight suggests the market is now turbo-charged.

The Nationwide says a 1.1 per cent increase in just the past month has taken annual house price inflation to 14.3 per cent, the highest since 2004. It also claims this means the average UK home costs a record £265,312 following a 21 per cent hike since the start of the pandemic two years ago. 

But not everyone is convinced this snapshot reflects what’s happening on the ground.

Jeremy Leaf, a former RICS residential chairman, says: “Although the Nationwide house price index has generally been widely respected for its accuracy and reliability, its latest report has a whiff of yesterday’s news. 

“These figures are still showing prices rising strongly based on mortgages granted for sales agreed several months ago so don’t reflect what’s been happening at the sharp end since. 

“Rising interest rates, inflation and wider concerns about the impact of the terrible events in Ukraine in particular have put a dampener on transactions and prices which continue to be sustained by stock shortages.

“We definitely have the feel of entering a more ’normal’ market phase, similar to pre-Covid times with supply and demand increasingly in balance.”

Some others accept that while the market right now appears in the fast lane, deceleration is bound to come given domestic economic and global political events.

“In simple terms, if you are thinking of selling, you should act sooner rather than later. Despite the exceptionally strong growth seen over the last year, a housing market slowdown is in the post” warns Tom Bill, head of UK residential research at Knight Frank.

“The cost-of-living squeeze and rising mortgage rates will undoubtedly take their toll on demand later this year. As we move beyond Covid and supply builds, this will also mean that house price growth becomes less eyebrow-raising. A strong labour market, high levels of household wealth accumulated during the pandemic and a slow trajectory for rate rises mean that prices will calm down without going into reverse” he adds.

“The economic issues now affecting the country, such as rising interest rates, cost of living increases and the Ukraine war, have not yet had any impact on the housing market” notes Mike Scott, analyst at Yopa, the online agency. 

He continues: “Yopa expects this strong growth to continue in the short term, due to continued high demand and restricted supply. However the housing market cannot ignore the wider economy forever and we expect a slowdown in the second half of the year, but no significant falls in prices.”