Twindig Housing Market Index 15 July 23

In the week that saw the publication of the Financial Stability Report, the Credit Conditions Survey and the RICS Housing market survey the Twindig Housing Market Index increased by 3% to 65.6 this week.

We were surprised that the Twindig Housing Market Index rose this week, the contents of the Financial Stability Report did not paint an optimistic picture of the housing market, although it consistently pointed out that the current conditions are more favourable than those during the Global Financial Crisis. 

The Credit Conditions Survey pointed to a more cautious outlook with lenders likely to reduce the supply of higher loan-to-value mortgages. Those contributing to the RICS survey seemed to have left the wrong side of the bed that morning. 

Activity levels continue to decline and we saw this at the coal face this week as both Barratt (one of the UK's largest housebuilders) and Winkworth (one of the UK's large estate agency groups) reported falling sales volumes, especially at the first time buyer level.

The data points and market commentary are consistent with our view that house prices will fall by around 10% this year and transaction levels by 20% as the housing market continues to be impacted by the cost of living crisis and rising mortgage rates.