ARK’s Market Synopsis

By Chris Seeley · 21 April 2022

Welcome to the latest edition of ARK’s market synopsis report covering market outcomes to the end of February.

A slightly delayed report from ARK covering the period of February with most commentators reporting their February outcomes in mid-March.

The reports make interesting reading and reflect a relatively unchanged market with record house price increases. Covid is still a driver for change and our previously reported “Race for Space” and “Drive to the Countryside” are still very pertinent market factors as described by Hometrack “Changed working practices in the wake of the pandemic, as well as local economic conditions and property types are also factors at play in the range of value growth recorded across the country”.

But what we are all asking is how does the outlook – look? Nationwide say: “The continued buoyancy of the housing market is a little surprising, given the mounting pressure on household budgets from rising inflation.”

They go on to say “The strength is particularly noteworthy since the squeeze on household incomes has led to a significant weakening of consumer confidence. Indeed, consumers’ view of the general economic outlook and prospects for their own financial circumstances over the next 12 months have plunged towards levels prevailing at the start of the pandemic”.

Given “The price of a typical home is now equivalent to 6.7 times average earnings, up from 5.8 in 2019.” (Nationwide) how sustainable is the market?

Our view is that demand will slacken; interest rate rises, increased cost of living, lower customer confidence in the market and the impacts on confidence because of the Russian invasion of Ukraine will affect a reduction in offer and valuation prices.

But the shortage of homes will buoy up the fall so we think we will see a fallback in house price inflation to smaller annual levels of below 3%. In which quarter that will be evident we are not certain but expect to see some changes by mid-summer.

To read more download the full report below.

 

 

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