Prices up just 0.1% in July, latest Nationwide HPI shows
Higher mortgage rates have contributed to a slowing of buyer demand that has caused annual house price growth to weaken, from 2.2% in June to 1.8% in July and up just 0.1% up on a month-month basis, according to the latest house price index from Nationwide.
However, while they have put some buyers off others are carrying on regardless, say experts.
Nicholas Finn, managing director of Garrington Property Finders, said: “Higher mortgage interest rates have combined with an unwelcome dose of uncertainty to dampen buyer demand in many areas.
“The cost of borrowing is still a barrier for some mortgage-dependent buyers, so if rates start coming down again we could see a welcome release of the demand that has been bottled up for the last few months.”
Price-sensitive buyers negotiating hard
Jason Tebb, president of OnTheMarket, said: “Average property values were flat on a monthly basis as focused, price-sensitive buyers negotiate, while sellers realise they will struggle to sell over-ambitiously priced homes when there is more stock to choose from.”
However, he said the market was showing resilience despite the challenges it faces from uncertainties caused by the impact of renewed hostilities in the Middle East on the economy. “The Bank of England’s decision to hold interest rates again for the fifth consecutive meeting is having a steadying effect, suggesting a calm, considered approach with no need to panic.
“Mortgage rates are edging upwards, which may increase affordability concerns for buyers in the short term but those who need to move are doing so regardless and are just negotiating harder on the price they are prepared to pay.”
Nathan Emerson, CEO at Propertymark, said the holding of interest rates provided clarity for those still looking to buy. “The interest rate decision, with rates remaining unchanged, provides greater certainty for borrowers and allows prospective buyers to plan with a clearer understanding of future mortgage costs.”
Stephen Perkins, managing director at Yellow Brick Mortgages, said he expected constrained price growth to continue. “Slower house price growth reflects a market adjusting to higher borrowing costs, not one falling off a cliff. Unless mortgage rates fall meaningfully, I’d expect house price growth to remain small over the coming months rather than seeing any dramatic moves in either direction.”
