Zoopla: Strong demand supports house prices, but slowdown expected
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, comments on publication of the Zoopla house price index for June, showing strong demand supports house prices, but slowdown expected.
Key points from publication:
- Housing market remains resilient with Zoopla forecasting 1.3m sales by the end of the year.
- This is 100,000 more than originally forecast.
- Desire continues to be fuelled by the pandemic with the rise in home and flexible working being key reasons to move.
- UK house prices up by 8.3% year on year, with the average home costing £256,000.
- This is lower than the 9.6% high of March 2022, but it remains above the five-year average of 4.3%.
- However, property price growth is expected to slow towards the end of the year as the cost-of-living crisis squeezes our incomes.
- The expectation is house price growth will be 5% over the whole of 2022.
Helen Morrissey says:
“Our love of property remains undimmed even in the face of a cost-of-living crisis that has given our finances a pounding in recent months. Demand remains high with Zoopla amending its forecast upwards on the number of sales expected by the end of the year.
“The impact of the pandemic continues to be felt as the shift to flexible working makes people reconsider their living arrangements and maybe make the move to somewhere a bit further afield that is more affordable. The increase in people choosing to retire as a result of the pandemic is also fuelling activity and house prices growth remains well supported for the time being.
“This is especially the case in more affordable areas with demand particularly strong in places like Bradford, Wolverhampton and Warrington.
“London remains the most unaffordable housing market with house prices over 11 times average income and this is shown with house price growth of 4% – well behind average growth of 8.3%.
“However, there are signs of a shift. Demand continues to grow but it is showing signs of slowing as the Bank of England hikes interest rates. With more rate rises on the horizon it is likely people will start to consider whether now is the right time to move, especially as rising bills take large chunks out of our disposable income as we approach winter.
“The prospect of paying higher mortgage costs will probably be a step too far for many people which will dampen demand and house price growth towards the end of the year and the beginning of 2023.
“Despite the outlook for weaker growth going forward a full-blown housing market crash looks very unlikely. Instead, the outlook is for a continued slowdown in the market.”
Kindly shared by Hargreaves Lansdown
Main article photo courtesy of Pixabay