Boomin boss and buoyant agents say no sign yet of housing market slowdown

The founder of fledgling portal Boomin says the latest Nationwide house price index findings demonstrate that there’s no sign yet of a housing market slowdown, despite the cost of living crisis.

Nationwide says that house prices rose 1.7 per cent between January and February alone, taking the annual rate of inflation up to 12.6 per cent and the price of a typical home to £260,230. 

In cash terms this is the biggest rise since the Nationwide index started in 1991 and it’s the first time the average house price has topped £260,0000.

“We’re riding a wave of house price growth at present, driven by a market experiencing very high demand for homes that just simply aren’t available” says Boomin chief executive Michael Bruce. 

“It’s only natural that this wave will start to lose ferocity at some point, but there’s certainly no signs of that happening just yet, despite a squeeze on the cost of living and a double increase in interest rates.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, comments: ‘Despite recent modest stock improvements, partly prompted by the rise in inflation and interest rates, the continuing overall shortage is constraining activity but supporting the acceleration in prices. It is probably too early to gauge the likely impact of the war in Ukraine on the housing market but not much if the first few days are anything to go by. We have already agreed several sales at fairly robust prices this week. 

“The expected additional rise in the cost of living driven by energy prices and possibly interest rates will reduce confidence to take on extra debt and make buyers even more determined not to overpay.”

Guy Gittins, chief executive of London-focussed agency Chestertons, adds: “London is seeing a substantial uplift in buyer demand – well beyond the previous record numbers of last year. Comparing February 2022 vs 2021 buyer enquiries are up 36 per cent whilst the number of properties for sale is down 11 per cent. 

“With house prices being dictated by supply and demand, and the number of property buyers being at an all-time high, the capital’s average property price has increased by seven per cent for the same time period.”

And Mike Scott of online agency Yopa states: “Yopa expects the combination of limited supply of homes for sale with strong demand to continue until the summer, which will inevitably push prices even higher. 

“Later in the year, however, we anticipate that the effect of rising inflation and interest rates on demand combined with supply levels beginning to recover is likely to slow the housing market down, though significant price falls are unlikely.”

Tom Bill, head of UK residential research at Knight Frank, has a similar approach, saying: “I don’t expect a return to more muted house price growth until supply picks up and there are signs of that gradually happening. While demand has been unrelenting over the last several months, higher levels of market valuations requested by prospective sellers since the start of the year indicate that supply will pick up, particularly as the spring market arrives. We would therefore expect price growth to return to single digits later this year. 

“Meanwhile mortgage rates will inevitably rise and higher inflation, accelerated by the effects of the Ukraine conflict, will start to put downwards pressure on demand and house prices. While the Bank of England may adopt a more risk-averse approach to raising the base rate given the geopolitical uncertainty, mortgage rates are still playing catch-up and lenders are likely to keep withdrawing their best products.”