Twindig Housing Market Index (HMI) - 4 June 22

In the week that we celebrated the Queen's Jubilee, the Twindig Housing Market Index fell by 1.5% to 75.0 this week.

The Bank of England released its mortgage approval data for April this week revealing that mortgage approvals fell for the third month in a row. Mortgage approvals in April 2022 were 65,974, 5% lower than in March and a more substantial 23% lower than their level in April 2021. This is the first time mortgage approvals have been below their 10 year average since June 2020. 

Mortgage approvals are, in our mind, the most important lead indicator for the UK housing market. A mortgage approval today typically leads to a housing transaction in three to four months' time. Time will tell if the housing market is beginning to slow as the increases in the cost of living start to bite.

On a more positive note, the Nationwide reported that house prices rose in May by 0.9% to £269,914 and that over the last year house prices had risen, on average, by 11.9% or £27,000 (just over £2,000 per month).  The Nationwide said that house prices were being supported by strong labour market conditions (the unemployment rate is close to a 50 year low) and a shortage of homes for sale on the market. However, the Nationwide expects the housing market to slow as the year progresses and mortgage rates and living costs continue to rise.

Overall, investor confidence was driven more by the forward-looking, but falling, mortgage approvals than the rising, but backwards-looking house price data this week.