Twindig Housing Market Index 14 May 22
The Twindig Housing Market Index fell by 2.4% to 73.4 this week as fears of a recession resurfaced and reports of increasing mortgage down valuations weighed on housing market investor's minds. After month after month of increasing house prices since the start of the pandemic, it seems that some lenders and some investors are asking how long can the house price party last?
We understand their concerns. The 12-month rolling annual rate of house price inflation has remained stubbornly above the long term trend of 6.0% for more than a year, and this is causing concern for some that the next move will be down.
However, on the other hand, RICS members reported this week in their latest UK residential market survey that new buyer enquiries increased for the eighth successive month and with demand for homes high and the supply of homes for sale scarce, house prices look firmly underpinned.
We perhaps take a rather contrarian view on house prices, whilst many worry about inflation and cost of living squeeze, our view is that ultimately inflation will lead to wage rises, which leads to bigger mortgages, which leads to higher house prices. We are not trying to minimise the pain caused by the cost of living crisis, that pain is both real and acute, however, we do not see it leading to significant house price falls.
You can read our full views on down valuations here, where we explain why we continue to believe that the pressure on house prices is up not down.