Twindig Housing Market Index (HMI) - 16 July 22
In the week that saw mortgage supply shrink and home buyer demand wane, the Twindig Housing Market Index nudged up, very slightly, by 0.3% moving from 71.6 to 71.8. Much like the Conservative Party leadership contest, the jury is still out as to the future direction of travel for the housing market.
When reading this week's reports of falling mortgage supply and home buyer demand, residential investors were not overly concerned. They point out that both falls come against a backdrop of unusually high levels of activity in the UK housing market as the working-from-home race-for-space coincided with the stamp duty holiday. The housing market may have past the peak of its heatwave, but it is still summer in the housing market, and its temperature is agreeable, with less chance of getting burnt.
Investors also took comfort from the fact that the Bank of England has judged that banks and mortgage lenders have considerable capacity to support lending to households and businesses even with the deterioration in the economic outlook. Therefore, prepare for a reduction in mortgage supply rather than a mortgage supply in free fall. We are not on the cusp of another credit crunch..
On a more positive note, national housebuilder Barratt Developments released its full-year trading update this week and commented that:
While there are clearly macro-economic uncertainties ahead, the housing market remains robust, our forward order book is strong and we have the resilience and flexibility to react to changes in the operating environment
Further evidence in our mind that the UK housing market is built on firm foundations