One indication is property portal Rightmove’s reported 6 per cent hike in its profits for the first half of 2022. The company expects sales activity to remain “broadly stable” for the rest of the year, though there are some early signs that there could be a change coming.

Rightmove has said that any cooling off of the housing market has so far had little or no effect demand, and conversely it may even improve the availability of new homes in what is a roaring seller’s market, by the year-end.

“The property market in the first half of 2022 cooled slightly from the frenetic pace of 2021, but remained healthy and ahead of 2019. Despite growing economic uncertainty towards the end of the half, there was little reduction in sales activity or demand,” says Rightmove.

With interest rates rising, and predicted to go much higher, mortgage approvals have stated to fall off from the start of this year. But demand for houses is such that prices have continued to rise every month for the past 12 months, recording the biggest annual growth since 2004, at around 13 per cent.

With further rate rises expected from the Bank of England later this year, the price of mortgages and existing mortgage holders’ payments will continue to increase, but the continuing unbalance between supply and demand in the house sales as well as the rental market, will underpin values.

The average price of a house in England at just shy of £300,000 according to Halifax statistics, after a near 20 per cent rise this year. But there is now a degree of anxiety among the professionals as to how long the market can hold-up given rising costs and the financial pressure on households.

Its a similar story in the rentals market

August is traditionally a busy month in the rentals market with millennials scouring the property portals for suitable accommodation for when they are either starting a new job or looking for student accommodation.

But this rear, along with the weather, the rental market is red hot. According to the Office for
National Statistics (ONS) rents are rising at their fastest rate since it began to keep records on rental prices in 2016.

Rightmove’s figures support the findings: over the past couple of years Rightmove’s statistics show that asking prices on rentals and also first-time buyer prices have been rising much quicker than they did before the Covid pandemic started.

In the last two years says Rightmove, average monthly rental payments are a full 17 per cent higher than they were two years ago. This is pushing people into taking properties that are smaller that their needs and in some cases of much lower quality.

Competition for the best places to rent is intense, with reports of open viewings resulting in renters outbidding each other for a place. But with the rent taking a bigger slice of people’s income, especially low earners, the situation is resulting in more tenancies being cut short, and more evictions at a time when the courts are struggling with huge backlogs.

According to Rightmove the average rent is now over £1,100 per month, in some cases double that in London, whereas the average mortgage payment for first time buyers is now around £1,000 per month, having risen by around 20 per cent in the last two years.

Squeeze on renters

All the signs are that things are not going to get any easier for renters as we approach the winter. With inflation predicted to enter double figures, energy bills rising sharply and a continuing shortage of suitable accommodation, renters are going to feel the pain.

With pending legislation that could prevent landlords evicting tenants without proving a limited number of grounds for eviction – section 21 is about to be abolished – there could well be a short-term surge in the number of evictions. These were already recorded at around 11,000 in June, as landlords either decide to sell-up or look to move tenants on inn order to increase rent levels.

The housing situation is increasingly problematic for a government that wants to encourage more home ownership at the expense of renting, but struggles to contain these runaway prices.

1 COMMENT

  1. Lenders WILL be factoring in increased energy costs.

    Many aspirant borrowers will fail the affordability criteria.
    Consequently they won’t be able to achieve the large mortgages that will be required.

    Insufficient mortgage credit will lead to declining property prices.

    Govt needs to get rid of the repayment criteria and allow OO to have IO mortgages without any repayment vehicle required.

    Then the same as LL.

    Allow such mortgages till 90.

    Allow OO to have smaller deposits…….say 10%.

    Doing this will then give OO a decent competitive advantage over LL.

    There is no need for a mortgage to be redeemed by retirement.

    A mortgage term till age 90 will result in most mortgages being redeemed by sale upon death!!

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