Slowdown or slump? Agents give their view on a housing market crash

Two senior estate agency figures have given their views on the prospects for the property market as commentators warn that longer-term mortgages as well as rising inflation, increasing interest rates and an impending recession could all combine to create a housing market crash.

Kevin Shaw, national sales managing director for Leaders Romans Group (LRG), claims a crash is unlikely as buyer interest remains steady despite economic concerns, while industry veteran Murray Lee of London-based Dreamview Estates is urging first-time buyers to delay purchases.

Shaw said: “Fears around a ‘burst bubble’ or a radical drop in house prices are unlikely. We aren’t seeing a significant drop off in buyer interest and despite higher mortgage rates, demand remains steady.

“In fact, Zoopla’s House Price Index July 2021 figures show that property demand still remains 25% above average over the last five years, on a par with year-on-year figures.

“Following the stamp duty-led home-moving frenzy of 2021, there's still a striking mismatch between supply and demand of properties, with housing stock at a particular low. As Halifax has noted, the ongoing supply-demand imbalance led property prices to rising year on year in June by 13%, the highest since late 2004.”

However, Shaw does acknowledge that growth will remain static.

He adds: “Although we won’t see rapid rises or huge slumps in pricing in the remainder of 2022 we do see the signs of a levelling off of housing prices.

“Given the Bank of England interest rate hikes, higher mortgage rates and the cost-of-living crisis impact on home buyers, house price growth looks to remain relatively static for the remainder of the year, with the cost-of-living crisis likely to impact the number of homes being sold. We expect slower growth, but no significant fall over the medium or long term.”

Shaw predicted a rush to mortgages, adding: “Mortgage interest rates have been rising quickly in 2022 off the back of five increases to the Bank of England base rate. This summer’s further interest rate increase to 1.75% − the sharpest for more than a quarter of a century means mortgage lenders will once again increase their rates.

“When interest rates change, it always creates a flurry of new applications, leading to a backlog that can take weeks to clear. We expect to see people who are looking to buy or those looking to re-mortgage in the next six months try to secure a mortgage rate as soon as possible to avoid further rate increases this year.”

Shaw suggested the property market in the North West is set to flourish.

He explained: “Despite a general cooling, LRG is continuing to see house price inflation in the North West and we expect to see continued housing price growth in the region for the rest of the year.

“The North West of England is an area that has particular supply and demand imbalance, with Liverpool and Manchester two of the leading cities for property demand – causing a rise in value. 

“Outside the major cities, demand for properties in Warrington in particular has seen growth of up to 70% above the five-year average while Oldham follows at 65% and Preston at 60%.

“As Rightmove data for July 2022 shows, the region is seeing an 11.2% YoY house price increase from July 2021, along with a 0.8% increase month on month from June. That’s compared to a 0% growth in the South East and -2.9% decrease in Wales.”

Speaking in a video interview with BestAgent founder Charlie Lamdin, Lee said: "My personal view is I think we are looking at a downturn in the market.

"I have seen ups and downs and ups and downs, it levels out eventually.

"We are in a hiatus because of the shortage of property which has forced the market up dramatically, that will level out because of the economic situation.

"If people are saying should I buy now, if you need to then the answer has to be yes.

"If you can take your time and keep an eye on the market, perhaps the answer is to wait and see what happens

"That may not necessarilly be great advice for my other estate agents, but it comes back to the word trust, you have to give bad advice and good advice.

"We dont know how bad it will get, my advice is if you need to buy keep on going, if you don't then keep an eye on what the market is doing."

Meanwhile, former agency founder and property marketing veteran John Durrant has also drawn on his own experience of working during the 1970s to highlight parallels with the effects of war, rising energy
bills, soaring inflation and the subsequent consequences on interest rates, bank lending and eventually home buying and selling.

He said in a LinkedIn post: “This seems the right time to be extremely cautious with marketing appraisals even if it means losing some instructions.

“Agents might also take a good look at their existing listings - if there are any that they feel might be ambitiously priced then better to be proactive now than see the value slide if you wait too long to share your concerns with your vendor.”

Durrant warned that former chancellor Rishi Sunak’s Stamp Duty holiday  created a housing bubble that was not sustainable.

He said: “This left a vacuum that other families were not ready to fill because many would not have realised they would need to move, and for others, the savings on stamp duty were worth less than the inconvenience of bringing their plans that far forward.

“Thus, we experienced a log-jam, a shortage of properties coming to the market that in turn ensured self-sustaining rapid price increases. A false market! A damn waiting to burst. If vendors can’t see other houses to buy and prices are rising rapidly, why would they risk marketing their own homes?”

Durrant warns that economic conditions are changing rapidly - just as they did in the 1970s, adding: “The data suggests we are at the genesis of that. Now is the time to advise extreme caution.


“If you think about it, there are probably thousands of agents who have only ever experienced a sellers' market. They will find it difficult to accept that a market can change from what they've known throughout their career. But it can. If those agents carry on doing what they've always done, the chances are that it will be bad for them.


It's likely that different parts of the country will respond faster than others. In other words, not everyone will be experiencing a slowdown just yet. Time will tell.


“Writing about this makes me feel really vulnerable. I don't like the words I'm writing one little bit. And yet, I feel I must.

“I really hope I'm wrong. But if I'm right then I believe that this upcoming market will see professional agents succeed and come out stronger because of it. Sadly, I believe others will fail. Time to step up.”


https://www.estateagenttoday.co.uk/breaking-news/2022/8/slowdown-or-slump-senior-agents-give-their-view-on-a-housing-market-crash