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July 19, 2022
Jeremy McGivern
Posted in: Property Prices

House prices defy expectations to hit record

House prices defy expectations to hit record

This was the headline on the BBC which was echoed by pretty much every newspaper.

The article continued:

House prices hit a fresh record in June, according to Halifax, despite expectations the rising cost of living in the UK would dampen demand…

But it expects price growth will slow.

Halifax said that the housing market had, so far, been largely insulated from the rising cost of living.

‘This is partly because, right now, the rise in the cost of living is being felt most by people on lower incomes, who are typically less active in buying and selling houses. In contrast, higher earners are likely to be able to use extra funds saved during the pandemic,’ said Halifax managing director Russell Galley…

Halifax expects, however, that the ‘increased pressure on household budgets from inflation and higher interest rates should weigh more heavily on the housing market, given the impact this has on affordability.

So while it may come later than previously anticipated, a slowing of house price growth should still be expected in the months ahead’ said Mr Galley.”

As I have proven in the past, “house prices defying expectations” is actually the norm rather than the exception as commentators have a woeful track record in understanding what really drives prices. Indeed, in the article above Mr Galley openly admits that he hadn’t considered that the cost of living might affect people who can’t afford property more than those with high savings.

Wow, who would have guessed that would have been something to consider…

That is not to belittle the suffering of millions at the moment, but as I have also said before, while it may not be pleasant, one has to look at the cold, hard facts if you want to make an intelligent decision on property.

As ever, the tone of all the articles was one of disbelief mingled with the underlying message that this can’t last forever and prices will fall soon. And they’re right. It can’t last forever and there will be another massive property crash. HOWEVER, the price rises will last for a lot longer than the “experts” expect and we will also see a massive boom in prices before we have a crash:

Firstly, a slowing down in price growth is not the same as price falls. Secondly, the Bank of England is relaxing mortgage regulations from 1st August. Thirdly, banks are well capitalised and there is still an extraordinary amount of money in savings accounts, so the market is nowhere near as overstretched as people think.

I could go on but if you want a more in-depth analysis of how this will unfold like all the previous property booms and busts, please see my latest Prime London Property Trends Letter (if you haven’t received this, please email dee@mercuryhomesearch.com or call 02034578855 (+442034578855 from outside the UK)).

About the author, Jeremy McGivern

My name is Jeremy McGivern. I am the founder of Mercury Homesearch, the internationally renowned property search consultancy, and author of The Insider’s Guide To Acquiring Luxury Property in Prime Central London. I have been acquiring property in prime central London for clients for over 13 years.

Having physically viewed over 22,000 properties in prime central London, studied the details of over 153,400 apartments, houses and investment opportunities and spoken to 232+ estate agents every week for over a decade.

My advice is in high demand and has featured everywhere from Bloomberg Television, The Financial Times and The Daily Telegraph to Forbes India and Bahrain Confidential.

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