There’s no doubt about it: house price growth is flat at best currently, but there is a real prospect of a slide into negative territory due to world events.
The main risk is that the conflict could mean that the usual Spring bounce in the housing market fails to materialise.
It’s a clear indicator of just how connected our world now is. It is astonishing how events in the Middle East can so quickly affect the price of a 3-bed semi in Surbiton or Solihull.
For those looking for a mortgage, there is already the beginnings of less-than-optimal news, as lenders have already priced the war into their rates.
There are going to be negative effects on the buy-to-let market
|
GETTY
Rates are above 5 per cent already, and the lower end of the market is starting to stall.
The banks have reacted to uncertainty over the impact on the cost of living and a squeeze on affordability.
Buyers are being priced out, and I’ve seen increased pressure on sellers to reduce asking prices just to get any commitment from buyers.
There is a prospect of an economic recession, which is very different to conditions just a few weeks ago, plus inflation may head north once again due to increased energy costs.
Economic uncertainty revolves around the length of the conflict and the blowback from fuel prices, which have spiked but it’s below that seen after Russia’s invasion of Ukraine – for now.
We were expecting an interest rate cut from the Bank of England just in time to give the traditional Spring bounce an extra push.
There are going to be negative effects on the buy-to-let market, which has already been subdued due to increased regulation.
There is a shortfall in new homes being built, but developers have resorted to offering heavy incentives to pick up buyers in a stagnant market.
The market has been relying on increased affordability for a slow recovery this year, though that must be in doubt.
‘Events in the Middle East can quickly affect the price of a 3-bed semi in Surbiton’
|
GETTYOverall, it’s a much bleaker picture than many expected for the second quarter of the year. Sentiment is down, and the wait-and-see approach is becoming the norm.
Property expert Jonathan Rolande is the founder of House Buy Fast.