UK housing market still remains robust
The UK housing market remained robust in May with prices rising faster than in April, although the figures from a Building Society suggested there might be the first signs of cooling.
It may be recalled that the world’s largest building society Nationwide had previously indicated that the the country’s housing market was slowing down.
Bank of England data earlier this week showed a sharp drop in mortgage approvals in April, a potential sign of the slowdown ahead.
The Central Bank’s figures available reveal that mortgage borrowing fell by 36 per cent in April in another signal that the red-hot housing market is starting to lose momentum in the face of rising inflation and a cost of living crisis.
Net mortgage borrowing dropped to £4.1bn last month from £6.4bn in March while mortgage approvals for house purchases also fell, from 69,500 to 66,000.
Figures suggest the first signs of cooling but economists doubt there will be a crash.
Nationwide said the strength of house prices had been surprising, fuelled by demand outstripping the supply of homes coming to the market. According to the Financial Times, the data showed prices rose 0.9 per cent last month, taking the average house price to £269,914 compared with 0.4 per cent in April, indicating what Robert Gardner, the building society’s chief economist, called “a surprising amount of momentum”.
"Household finances are likely to remain under pressure with inflation set to reach double digits in the coming quarters if global energy prices remain high," Gardner said while warning that the consumer confidence had collapsed, and further interest rate hikes from the Bank of England would likely cool the housing market further as they fed in to mortgage rates.
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