Reports reveal further evidence of slowdown in housing market

House price inflation begins to slow, but affordable home completions show recovery

Rightmove published their house price index for June this week, revealing that whilst the average property price hit a new record for a fifth consecutive month, the monthly increase was just 0.3% – the smallest increase since January.

Reporting house price inflation growing 9.7% over the year to reach an average value of £368,614, the property website warned that affordability constraints would combine with seasonal price drops to contribute to a further slowing of house price growth in the coming months, with annual growth forecast to be 5% by the end of the year.

Entering the second half of the year, we anticipate some further slowdown in the pace of price rises, particularly given the worsening affordability challenges that people are facing.

TIM BANNISTER, DIRECTOR OF PROPERTY SCIENCE, RIGHTMOVE

The Office for National Statistics also published their house price index for April this week, reporting a 12.4% annual increase in property prices, meaning the average home grew in value by £31,000 in twelve months to reach £281,000.

Wales and Scotland experienced the highest annual growth, at 16.2% each, followed by England (11.9%) and Northern Ireland (10.4%). London continues to be the region with the lowest growth, at 7.9%.

Meanwhile, housing programmes delivered by Homes England resulted in 38,436 new homes starting on site and 37,614 completions between April 2021 and March 2022, as the sector showed signs of recovery from the Covid-19 pandemic.

Of the housing completions, 71% (26,485 units) were for affordable homes – an 11% increase on the previous year.


Construction insolvencies set to rise, as material volume sales decrease

Insolvency Service figures have reported a fall in construction firms going bust in April, with 384 businesses going under – however, this is still more than double the 157 firms in the same month last year.

Data obtained from the British Business Bank revealed that 2.5% of all borrowers in the construction and transport sectors had defaulted at least once on loans taken out under the Coronavirus Business Interruption Loan Scheme – almost twice the levels of other sectors.

Meanwhile, the volume of product sold by Britain’s merchants in April 2022 was 15% lower than April 2021.

Figures from the Builders Merchant Building Index revealed that – whilst sales were down just 0.9% over the year to April – the drop in volume sales reached 15.1%.


Berkeley shares fall despite profit increase

Shares in London-based developer Berkeley slid this week, despite the company announcing a 6.4% increase in pre-tax profit for the year to the end of April.

Warning over the potential for a “volatile” operating market to impact supply and demand, the developer saw shares fall more than 5%.

The economic and operating environment remains volatile with inflation, labour and materials shortages, interest rates and regulatory costs of development all having the potential to impact supply and demand.

ROB PERRINS, CHIEF EXECUTIVE, BERKELEY

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