Cost of living crisis ‘set to cause housing sales slowdown’
July 06, 2022
The housing market will remain strong over the next 12-months but the cost of living crisis combined with rising interest rates will see a slowdown from the recent boom.
A surge in demand for homes throughout 2021 and 2022 has seen substantial price rises, driven in part by pent-up demand due to the Covid lockdowns.
Grant Whittaker, building consultancy associate at Kirkby Diamond, said the growth in working from home flexibility means homeowners require more space and many people have moved out of the cities. Demand in London, though, has begun to increase again in recent months.
“Since March, our building consultancy team has surveyed more than 160 residential properties. The question is whether this surging demand and rising prices can continue?” said Grant.
Craig Rennie, partner at HRJ Foreman Laws in Hitchin, said: “Transactions have reduced since the Stamp Duty Land Tax exemption came to an end last year but they are still higher than they were prior to this.
“I would expect transactions to reduce slightly over the next couple of years as the cost of borrowing increases and clients have less disposable cash. Prices should inevitably start to level-out but demand will remain strong due to the shortage of properties.”
Adam Smylie, head of valuations at Kirkby Diamond, said: “In the most part, residential property prices appear to be holding up, driven by a lack of stock and continuing strong demand. This shortage of stock is causing a reduction in transactions compared to previous years. Whilst historically this would be a sign of a market downturn, this is not the case in current market conditions
"In some local markets there are cases of an over-supply of flats. Purchasers have been moving away from leasehold property since June 2020 when working from home became the norm for many employees. As ALEP members, we regularly undertake Leasehold Reform valuations for clients. The number of valuations undertaken in 2022 is at lower levels than 2021 as purchasers often obtain lease extensions to sell their properties and, with flats failing to sell in some markets, lease extensions are not required.”
Cover image: Photo by Lina Kivaka