14th June 2022
The property market has only shown signs of further increases in prices, despite rising interest rates. Building Society Nationwide is one of the biggest mortgage lenders. They said that the average price of a home in the UK went up by 0.9% in May, reaching £269,914. This was the tenth successive monthly rise.
While the annual rate of increase did go down from 12.1% to 11.2%, there are no signs of a slowdown in the times to come.
Robert Gardner, the chief economist at Nationwide, shared his two cents on this. He believed that household budgets have shrunken due to high inflation and the rise in interest rates. Despite that, the housing market is defying all odds, and the prices of houses are only going up. It is a surprise since it doesn’t reflect the economic situation.
The labor market, on the other hand, is doing well. The unemployment rate has fallen to its lowest in fifty years, and there is a lot of hiring happening, with the job market only flourishing.
At the same time, house prices are going up. Property commentators are shocked to see this trend in the property market. They believe that this is an absurd situation. Some also believe that this will only last for a very short time, after which the property market will dip.
Tomer Aboody, the director of property lender MT Finance, also added his own viewpoint, speaking about how he was shocked to see the housing market only going up, despite people’s buying power going down due to high living costs. He was unsure about how the situation was going to unfold in the future. But he also highlighted that this was a rather strange economic situation because it didn’t make sense.
Homeowners are now using their money intelligently. They are trying to get the most value for their money by using their money to improve the quality of their life. However, it is yet to be seen if the same trend continues over the years. This seems highly unlikely because the interest rates will only result in added pressure on disposable incomes, which means that homeowners will not be able to spend the way they did.
Anna Clare Harper, the director of property technology platform IMMO, said that many must be wondering what exactly is happening to the housing market, despite being in the post-COVID and post-Brexit world. The effect is quite the opposite of what most had imagined, raising concern and confusing most people.
Moreover, while the demand for housing is increasing, the supply doesn’t match the demand, which has led to a shortage in the market at this point in time.