Both the Nationwide Building Society & and leading estate agent Knight Frank have predicted the UK property boom is about to end.
They both believe house prices set to slow and stagnate following years of sustained rises.
Nationwide’s chief economist Robert Gardender said” although demand is being supported by strong labour market conditions, where the unemployment rate has fallen towards a 50-year low, and with the number of job vacancies at a record high.
“At the same time, the stock of homes on the market has remained low, keeping upward pressure on house prices. We continue to expect the housing market to slow as the year progresses.
“Household finances continue to be under pressure, with inflation expected to hit double figures and with consumer confidence at record lows and increasing interest rates, we expect a cooling impact on the market, especially if rising mortgage interest rates feed through”
Since the pandemic there has been a boom in prices across the country, with an increase of 14.3 in the last year, according to Nationwide Building Society, putting the average price at around £265,000.
Leading estate agent Knight Frank is predicting that house prices will also slow down and return to single figure growth by the end of 2022, and only increasing by 1% in 2023.
They also believe that prices will slow because of cost-of-living increases, rising mortgage interest rates and supply issues.
The head of UK residential research Tom Bill at Knight Frank said: ‘The UK property market has defied gravity over the course of the pandemic.
‘Tight supply, low interest rates, accumulated household wealth and a desire for more space and greenery have conspired to produce double-digit house price growth over the last year.’
He is predicting that over the next five years, average UK house prices will rise by just 13.6 per cent – less than they did in the last year alone.
Knight Frank feels the reduction and slow down in price increases will continue to lead to interest rate rises.
Bill said, “Mortgage rates will continue to rise alongside interest rates,’ he adds. ‘The Ukraine conflict may slow the pace of this normalisation, but the Bank of England will feel a need to respond to inflationary pressures in the short-term and the UK’s economic recovery in the longer-term.’
Knight Frank often has its critics with some agents believing they have overestimated the slow down and some believe although certain factors will slow the market, the unprecedented market we have had over the pandemic will take time to ‘normalise’
At Spectrum Independent we have also seen an increase in people ‘staying put’ and remortgaging and improving and extending properties as opposed to moving and this reflected across the country is a contributing factor.