Halifax and Zoopla warn of slowdown in housing market
Last week Nationwide published their house price index for May; this week it was the turn of Halifax and Zoopla to follow suit, with both warning that the housing market is showing signs of slowing.
Halifax reported that house prices grew 1.0% in May – the eleventh consecutive monthly rise – but also revealed that annual house price inflation has slowed to 10.5%, with the value of a typical property reaching £289,099.
Russell Galley, Managing Director of Halifax, stated that – although house prices had jumped by 74% in the past ten years – the market was showing signs of a slowdown.
Annual growth remains in double-digits…although this is the slowest rate of growth seen since the start of the year.
Mortgage activity has started to come down and, coupled with the inflationary pressures currently exerted on household budgets, it’s likely activity will start to slow.RUSSELL GALLEY, MANAGING DIRECTOR, HALIFAX
Meanwhile, Zoopla reported that house prices hit a record high of £250,200 in April, rising 8.4% in the year.
The property website revealed that Wales saw the strongest annual growth, at 11.6%, followed by the South West (10.5%) and the East Midlands (10.2%). London lagged behind at just 3.6%.
However, like Halifax and Nationwide, Zoopla warned that the growth in house prices was set to slow, with more houses coming onto the market and a higher number of sellers offering discounts.
Housebuilding output flatlines in May
The latest Construction Purchasing Managers’ Index (PMI), compiled by CIPS and S&P Global, has revealed that growth in housebuilding work flatlined in May, falling to 50.7 in May from 53.8 in April. Any figure above 50 demonstrates a growth in activity.
The figure is the lowest recorded since May 2020, during the first Covid-19 lockdown, with most survey respondents citing higher borrowing costs, inflationary pressures and subdued consumer confidence as contributing factors to the slowdown.
Meanwhile, rocketing inflation has seen Mace revise its tender price forecast up by nearly a half for the rest of this year, from 5.5% to 8%.
The international consultancy company pointed to continued conflict in Ukraine and higher labour costs as primary reasons for the upturn.
It’s good news for material manufacturers, though, who are reporting booming sales as a result of cost inflation.
The latest trade survey from the Construction Products Association has seen nearly half of firms reporting a jump in sales in the first three months of 2022, compared to the fourth quarter of 2021.
Government announces Right to Buy extension
This week saw a number of housing announcements from the Government, following a tumultuous week for Prime Minister Boris Johnson.
The Department for Levelling Up, Housing and Communities announced a package of measures to strengthen building safety regulations and fire guidance post-Grenfell, including an Evacuation Alert System for all buildings over 18 metres in height.
Meanwhile, Johnson announced an extension of the Right to Buy scheme to housing association tenants, and committed to building a replacement social home for each one sold.
Finally, Levelling Up Secretary Michael Gove announced that the new National Planning Policy Framework will seek to support better environmental outcomes, in the ongoing quest to meet net zero carbon targets.