New data out today from Nationwide revealed the UK’s homes have risen in value over the last year to June by 10.7% – this compares to a 11.2% rise in May.
This ‘modest’ slowdown in growth is adding to the stack of evidence which is suggesting the housing market boom experienced during the pandemic may be coming to an end.
Indeed, the Bank of England revealed mortgage approvals had dropped in April along with the amount of money being borrowed by homeowners.
Alice Haine, personal finance analyst at Bestinvest, said this indicated buyer demand was declining amid rising interest rates.
She added: “The latest Nationwide House Price Index offers further indication that the pace of house price growth is finally slowing following the whirlwind of new records set during the pandemic.”
However, despite the signs of a slowdown, prices are still on the up. In June house prices grew by 0.3% meaning the average property is now £271,613.
The South West was the strongest performing region, according to Nationwide, which revealed it had experienced price hikes of 14.7% in the last year.
Hot on its heels was East Anglia, where annual price growth was 14.2%.
Wales experienced a slowing in annual price growth to 13.4%, from 15.3% in the first quarter. Meanwhile, price growth in Northern Ireland was similar to last quarter at 11.0% and in Scotland there was a 9.5% year-on-year rise in house prices.
Is the property market heading for a crash?
There are two schools of thought about how things may pan out with property prices. On one hand there are those who believe things will slowdown gradually – indeed property firm Knight frank expected growth of 8% in 2022.
But others think this is optimistic. Alice Haine, said: “Look ahead though and the picture appears less rosy with runaway inflation, rising borrowing costs and the ongoing ramifications of the Russia’s war with Ukraine all set to have a dampening effect on property prices. “
And Imogen Sporle, head of term finance at bespoke broker Finanze, thinks the bubble is about to burst. “I am fully subscribed to the idea of house prices crashing soon,” she said.
“Whether the full crash happens in 2022 or shortly after, I am not sure, but it’s coming. Demand in the property market will cool due to painfully high inflation.
“Inflation is the property market’s nemesis. No matter how much money you have in the bank, you are going to feel the current level of inflation and that will hit sentiment hard.
“Lenders becoming more conservative with affordability is sensible in the current climate but of course this will mean people can borrow less, which means sellers may soon have to price lower.”
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