Twindig Housing Market Index (HMI) - 11 June 22

In the week that saw house prices rise for the 11th month in a row, and Right to Buy re-launched and extended to housing associations as well as local authorities the Twindig Housing Market Index rise by 0.1% the slightest of margins to 75.1 this week.

It seems that the extension of Right to Buy to Housing Associations and the battle cry of Benefits to Bricks did little to cheer residential investors this week. 

However, much like the Confidence vote this week, investors maintained a level of confidence in the housing market even if today's vote is not a ringing endorsement.   

That said the continued rise in house prices heartened investors although some believe that the scale of the increases is creating problems for the future. Interestingly RICS reported this week that buyer demand for homes fell for the first time in eight months during May, leading some investors to ask if house prices had travelled too far in the face of significant increases in the costs of living. When the RAC tell us that a litre of petrol or diesel will soon cost more than £2 and that filling our tank will cost more than £100 it is easy to see why buyers are questioning whether now is the time to take on more debt in the form of a larger mortgage.

As the costs of living (and buying a home) increase we expect the pinch point to be housing transactions rather than house prices. We continue to believe that house prices will be higher at the end of this year than they were at the start of it and that the volume of housing transactions in 2022 will be lower than they were in the stamp duty holiday fuelled 2021.  

At the other end of the scale, the BBC and Propertymark reported that the private rented sector is shrinking as compliance costs rise and the financial benefits of buy to let are reduced. Whilst we appreciate that some landlords are seeking to exit the market, we struggle to see how the sector can shrink while Generation Rent keeps growing.