With the squeeze on energy prices, food bills and other services are we likely to see a pinch in the market?
The UKs annual inflation rate reaches 6.2% earlier this year which lead to panic among home owners and caused them to reassess their own mortgage needs. The Bank of England has also given indication this number is likely to increase to 10%.
Whilst it is fair to say that the housing market it beginning to slow, despite the average house price being £282,753, the largest growth since the financial crash. There are a number of factors that will cause this slow in house prices. Firstly the increase in both energy prices and national insurance. With the pinch on these two living expenses people will have less affordability to move house or upsize.
Seeing as lenders typically work from an affordability model, these increases alone may affect the loan size offered to people applying for mortgages. This means less people are going to be in the position to buy therefore the housing demand lowers. Meaning for every property on the market fewer people will be looking and therefore the prices will either reduce or steady with fewer increases in prices.
There is, however, conflicting data to this. Both Savills and Zoopla project 3-3.5% price increases over the next year and Halifax envisions up to 2%. So whilst these number are not as vast and the past two years there is still set to be a steady growth in the property market.
With all this in mind we still believe that as said by Zoopla and Halifax the property market it likely to remain steady with growth.
What’s your thoughts?