Concerns over a recession may be about to correct a long-standing distortion in the UK housing market, according to the latest data from Knight Frank.
The data showed that the number of sales instructions in the week ending 14 May was the tenth highest figure in the last decade across the UK.
In property markets outside of the capital, instructions were at their highest weekly level in ten years.
Meanwhile, the number of offers accepted across the UK was the highest weekly number in a decade.
While Knight Frank highlights that it is only one week’s figures, it suggests that “the mood appears to be shifting”.
At the start of the month, the Bank of England increased the base rate by 25 basis points to 1%, the highest level since 2009. Inflation in the UK also climbed to 9% in April, the sharpest rise in 40 years.
This followed predictions from Monetary Policy Committee (MPC) member Michael Saunders, who said that inflation may exceed the 10% peak forecast for Q4 2022 in the latest monetary policy report (MPR).
However, Knight Frank says: “There is little consensus about what will happen to the economy and the implications for the UK housing market.”
“The combination of the recent warnings and a base rate that is now at its highest level in more than 13 years, has been enough to jolt some owners into action in the belief that house prices may be peaking”, it explains.
Knight Frank’s latest analysis on what the Bank of England’s (BoE) latest economic predictions mean for the UK housing market suggested that double-digit house price growth is expected to slow to single digits by the end of the year as mortgage rates rise, the cost of living crisis continues, and supply increases.
Knight Frank head of country business James Cleland says: “The number of buyers is still very high and now vendors are sensing that the market may be at its peak, hence taking offers and coming to the market. It is a sudden recognition that now is the time to act, brought on by all of the obvious factors coalescing at the same time.”
From the latest data, Knight Frank says it expects price growth to continue moderating as supply builds.
The Official National Statistics (ONS) house price index became the latest indicator to suggest prices were slowing last week.
ONS’ data found that house prices in the UK have decreased from 11.3% in February this year.
Knight Frank head of the south west region Mark Proctor adds: “I have rarely been under such pressure to get houses to the market so quickly as our clients are looking to take advantage of current demand.”