Despite the growing cost of living problem, a carefully followed indicator of the UK property market has shown “surprising momentum,” with prices hitting a new record.
Nationwide’s monthly study implies a downturn is likely as financial constraints mount but notes there are several factors propping up prices including the UK’s strong rate of employment.
The Nationwide research covering June showed the annual rate of house price growth easing back for the third month in a row, to 10.7 percent from 11.2 percent in May.
That was despite a 0.3 percent jump month-on-month, the mortgage lender claimed, which lifted the average cost of a property to a new high of £271,613.
Robert Gardner, the company’s chief economist, described the market as “conflicted.” “Mortgage approvals for home purchases fell back to pre-pandemic levels in April, and surveyors have reported a decrease in new buyer inquiries. These are the first signals of a downturn.
With consumer confidence at an all-time low and inflation driving household budgets out of reach, the property market has managed to maintain a surprising degree of momentum.
Inflation is at its highest level in 40 years as a result of rising prices for energy, fuel, and food. He cited high employment as a supporter of the economy. However, buyers are facing a slew of higher expenses.
The Bank of England has raised the Bank rate five times in an effort to moderate some of the inflationary pressures affecting the economy.
That tightening has drove up borrowing prices, with mortgage borrowers on normal variable and tracker plans facing a larger burden alongside those seeking a new fixed rate.
Mr. Gardner went on to say: “The current robustness of the labour market, where the number of job openings has outpaced the number of unemployed persons in recent months, may account for some of the resilience.
“In addition, the unemployment rate has remained near 50-year lows over the past few months. As a result, housing prices have continued to rise as a result of a short supply of dwellings on the market.”
“The market is projected to stall further as pressure on household budgets intensifies in the coming quarters,” he added, “with inflation expected to hit double digits towards the end of the year.
