From a boil to a simmer: Housing market demand to remain strong in H2

At the beginning of 2022, I wonder how many people across the industry would have forecast a headline which included the words ‘house prices hit sixth consecutive record high’. Not too many I would imagine. However, that’s not to say the industry entered the year with a negative mindset regarding its potential for 2022, by and large it didn’t. There appeared to be an overriding sense of expectation that the housing market would remain relatively buoyant although there would be an inevitable lull in activity levels and in the volume of transactions from a purchase perspective.

In many ways, the first six months of the year have far exceeded the vast majority of expectations and any H2 softening in demand will merely move the market from a boil to a simmer. I say this on the back of latest Rightmove house price index which outlined that the average price of property rose in July by 0.4% to £369,968 – a sixth consecutive record high.

The research outlined how a continuing desire to move, and low numbers of homes for sale, are driving further price growth, even at a time when personal finances are becoming increasingly stretched. This combination demonstrates two major outliers as to why the UK housing market remains so robust even though rising interest rates and escalating living costs are impacting a variety of borrowing scenarios.

Looking forward, the second half of 2022 is likely to include a mix of challenges and opportunities. Opportunities will arise in many sectors but especially for remortgage purposes as a growing number of homeowners and landlords are looking to secure their monthly outgoings amidst some turbulent rate, economic and political conditions.

Amidst these uncertain times, it was interesting to note the outcome of polls taken in our most recent Game Changer webinar. This used the halfway point of 2022 to reflect on the first six months of the year, to assess current market conditions and to discuss the future. One highly encouraging result emerged in the fact that two thirds of property professionals (64%) said they were either somewhat or very confident about their business prospects over the next 12 months.

Further polls taken during the webinar posed questions including: Do you see the property market...? To which almost half (49%) opted for the response – remaining static, 32% suggested that it will fall and 19% thought that it will rise. Attendees were also asked 'Which part of the market do you see as being most impacted negatively over the next 12 months?' The response was largely split with 40% pointing to the buy-to-let/rental market as being most likely to be negatively impacted, whilst 27% chose the owner occupier market. A third (33%) said that they are likely to be impacted equally.

Finally, when it came to the biggest drivers impacting the market, half of respondents (50%) indicated that the cost of living would be the biggest driver. Higher interest rates captured over a third of the votes (36%), general economic uncertainly accounted for 15%, consumer confidence 14%, increased taxation 6% and all of the above came in at 34%.

Nothing hugely surprising emerged within these responses but it was great to hear plenty of positivity being displayed by those in attendance who, justifiably from its past performance, maintain such strong levels of confidence in the UK housing and mortgage markets. And long may this continue.