A co-creator of the Halifax house price index is warning that Angela Rayner’s Renters Rights Bill could destabilise the housing market.
Professor Joe Nellis, who is also an economic adviser at accountancy and advisory firm MHA, was speaking after his own index produced its most recent data, reflecting a dip in prices.
Nellis comments: “The Halifax House Price Index has recorded a surprising 0.4% dip in UK house prices in May. However, year-on-year growth remains strong, with the annual growth rate coming in at 2.5%. This comes as rising wages is pushing affordability up and greater competition in the mortgage market is leading to more favourable rates.
“This growth is set to continue as huge demand for houses persists in the UK. This is something that the government has recognised, setting an ambitious target to build 1.5m new homes by 2029, but recent estimates suggest that this is looking overly optimistic.”
He is also warning that the Renters Rights Bill – still awaiting a date for its next stage in the parliamentary process – may alter the balance of the broader housing market as its new restrictions make buy to let less attractive for investors. He continues: “These new restrictions could disincentivise landlordism, encouraging the sale of rental properties and increasing supply, or discouraging potential landlords from buying properties and reducing demand.
“Both scenarios would apply downward pressure on prices and provide some respite for would-be homeowners.”
The latest Halifax data on the housing market, released at the start of the weekend, shows that average UK house prices fell by -0.4% in May – a drop of around £1,150 for a typical home – following a modest rise in April.
Over the past 12 months, prices have grown by +2.5%, adding just over £7,000 to the value of a typical home, which now stands at £296,648.
Halifax’s head of mortgages, Amanda Bryden, says: “These small monthly movements point to a housing market that has remained largely stable, with average prices down by just -0.2% since the start of the year. The market appears to have absorbed the temporary surge in activity over spring, which was driven by the changes to stamp duty.
“Affordability remains a challenge, with house prices still high relative to incomes. However, lower mortgage rates and steady wage growth have helped support buyer confidence.
“The outlook will depend on the pace of cuts to interest rates, as well as the strength of future income growth and broader inflation trends. Despite ongoing pressure on household finances and a still-uncertain economic backdrop, the housing market has shown resilience – a story we expect to continue in the months ahead.”
