Category: Market Commentary

Slowly Speeding Up

Blind Spots & Unknown Risks

High Density Development Sector

The latest data shows a mixed picture for the state of the UK housing market. The hangover from the Truss turmoil is slowly clearing and some leading indicators for activity are back near pre-pandemic levels. However, the housing market is highly seasonal so the next couple of months could be the best it will get this year. Meanwhile, the rapid exit from record low interest rates may be easing but we are only just beginning to find out what a decade of this has done to the UK’s economy, financial system, and housing market. It is far from over.

Continue reading “Market Commentary – March 2023”

Back To Before

Landlords Selling Up

Recent activity and house price data shows the housing market is still struggling with the fallout from the “mini-budget” and higher mortgage rates. There are some signs that activity is returning to levels recorded before the pandemic but this may just be a temporary catch up. We also investigate landlords selling up.

Continue reading “Market Commentary – February 2023”

Can’t Buy, Won’t Buy

How Big?

Still Not Special

Mortgage approvals have collapsed as high rates limit the ability of buyers to meet sellers’ still high price expectations. While mortgage rates have fallen from their peak, they are still firmly above 4% and a price correction is still very likely (and may be underway). However, rapidly rising wages could ease some of the pain during the correction. Meanwhile, we are still not special as house prices are falling from their post-pandemic highs in other countries.

Continue reading “Market Commentary – January 2023”

Back To Normal From Near Zero

Three Periods: Before Truss, During Truss, and After Truss

Renting Versus Buying

The UK’s housing market during 2022 can be split into three key periods: Before Truss, During Truss, and After Truss. The Before Truss period covered the first eight months of the year and saw the housing market continue to boom despite increasing interest rates and the cost of living crisis. The During Truss period was short and traumatic but with long-lasting consequences. The After Truss period is still ongoing but early signs suggest the housing market could be in real trouble during 2023 as higher interest rates and a recession hit activity and prices.

Continue reading “Market Commentary – 2022 Review”

Rising Waves

Quicker To Sink

New Build – New Lifeboats Needed?

There have been rising waves threatening to sink the UK housing market all year but they have stayed just below the surface – until now. House prices continued rising and transactions stayed above their pre-pandemic levels despite rising rates and the cost of living crisis. However, the mini-budget was the turning of the tide and the surface is starting to look a lot more turbulent. The waves are now threatening to sink the housing market – an outcome that will probably hit transactions hardest and suggests the new build sector will need support.

Continue reading “Market Commentary – November 2022”

Sunak Saves The Day

But It’s Still Looking Scary

High Loan-to-Income Lending

The mini-budget shock may have eased with Truss’ departure but a housing market downturn is still a very likely prospect. At the beginning of September, when mortgage rates were just hitting 4%, we warned the housing market was getting scary. In the aftermath of the mini-budget we said it was terrifying. Given recent events, we’ve downgraded it back to scary – but the fallout could still be severe for households, the market, and the economy.

Continue reading “Market Commentary – October 2022”

Truss Turned It Terrifying

Price Falls & Negative Equity

Long Lasting Impact

Last month we wrote this is getting scary. Since last week’s mini-budget, it has turned terrifying. There is still a great deal of uncertainty about the future and a housing market downturn is not guaranteed. However, the events of the last week have accelerated the market towards what was its worst case scenario and the opportunities to avoid it are reducing. Even a full reversal would leave a long lasting impact on the mortgage and housing markets.

Continue reading “Market Commentary – September 2022”

This Is Getting Scary

Regional Repayments

Rental Squeeze

The housing market is still booming but time is running out. The cost of living crisis is squeezing finances, interest rates are increasing, rents are rising, consumer confidence is collapsing, and climate change is causing havoc across the globe. This is getting very scary. While the housing market may be supported by a last rush to lock in low rates, these multiple headwinds will begin to hit market activity and probably house prices in coming months.

Continue reading “Market Commentary – August 2022”

Signs of Stress

The Turning Point

House prices are still booming but the rising cost of living and increasing interest rates are starting to hurt. The market is still benefiting from the boom in buyers and a lack of stock but there are some potential signs of stress starting to appear. While the cost of living crisis is hurting those at the lower end of the income distribution most and rising rates will hit potential buyers rather than existing owners, the squeeze is only going to increase in coming months. The autumn could mark the turning point for the housing market.

Continue reading “Market Commentary – July 2022”

Stuck In The Corner

Rapidly Rising Rates & Still Not So Special

Once Every Ten Years

The housing market is still booming despite higher mortgage rates and the rising cost of living. However, the risks of a slowdown are increasing but the impact of higher mortgage rates will depend on what happens to loan-to-income ratios. It’s not just the UK housing market that is facing these challenges, with other high growth markets facing higher rates and slowing prices. Meanwhile, interpreting the 2021 Census is a challenge given its timing.

Continue reading “Market Commentary – June 2022”