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Your June market update

A new scheme for buyers — and signs of a slowing market? We've got it all in your June market update.

Home valuation

Experts have been predicting it, we’ve all been talking about it — but still the housing market has remained buoyant over the last few months, with little sign of a cool off. However, this month’s headlines confirm that it looks like the market might actually be starting to change. We’ll explore what this news means for first time buyers, and we’ll also take a look at the government’s proposals for a new scheme to help buyers – making sure we break down the headlines and what they mean for you. Welcome to your June market update. 

“One green shoot”

According to the property lender Halifax, May was a mixed bag in the housing market. While house prices continued to grow (making May another record-breaking month where the average house price hit a high of £289,099), it also saw the slowest rate of growth since the start of the year. Experts have been predicting a cool off for some time now – and it seems that the very first signs are, oh so slowly, starting to appear.

As Russell Galley, managing director at Halifax, discusses: 

“However, the housing market has begun to show signs of cooling. Mortgage activity has started to come down and, coupled with the inflationary pressures currently exerted on household budgets, it's likely activity will start to slow…So, there is perhaps one green shoot for prospective purchasers; with overall buying demand down compared to last year, we may be past the peak sellers' market."

Despite these early signs it seems unlikely that the market is going to dramatically drop any time soon. Why? You guessed it, it’s that age old problem of supply and demand rearing its head again. 

As Danni Hewson, a financial analyst at AJ Bell, explains: “Cooling, definitely but the housing market is unlikely to come off the boil, at least for the foreseeable future, especially as it’s becoming harder and more expensive to find places to rent.” Hewson also went on to note that this problem isn’t going anywhere without a period of “unprecedented housebuilding”. 

So, for those hoping that a reduction in house prices would help them onto the housing ladder, this won’t come as welcome news. As George Hammond writes in the Financial Times, the gap between equity rich homeowners and first time buyers will only deepen over the next few months. While those in the rental sector face escalating rental prices and the deepening cost of living crisis, it will become harder for them to save for a deposit. While those who already have housing equity, have benefited from the price growth over the past two years – which has given them the freedom to sell up and move. We’ll have to wait to see how this pans out next month.

In the second part of the government’s plan, they have pledged to help more families on Universal Credit to get onto the housing ladder."

Plans for a new buyer scheme

In other news, there’s been a lot of talk this month about the government’s plans for a new buyer scheme. While plans are still in the talking stages (nothing official has been released yet), the blueprint for the scheme is expected to comprise of two main factors. Firstly, the government is expected to pledge to extend the Right to Buy scheme for people renting from housing associations. The second is expected to allow people to use their housing benefits to pay for mortgages. But does all this mean for buyers? Let’s break it down.

Well, the first part of the proposed plan focuses on the Right to Buy. This is an existing government scheme – which reaches back to Margaret Thatcher’s government – which allowed council tenants to buy their homes for a discount of between 35 and 70% of the property’s value. Under new government proposals, this scheme will be extended to the two and a half million people who currently rent their homes from UK housing associations — allowing them to buy their homes outright. But some critics point out that Right to Buy was thought to be one of the reasons we've seen continuously spiraling house prices and rents, as many of those homes ultimately ended up in the hands of private landlords.

In the second part of the government’s plan, they have pledged to help more families on Universal Credit to get onto the housing ladder. According to The Independent, the government plans to argue that the £30 billion which they provide for housing benefits could be spent helping people to become first time buyers. The Prime Minister, Boris Johnson, has also said that he would consider changing the welfare rules so that 1.5 million people who work, but are also on housing benefits, could have the opportunity to use those benefits for a mortgage – rather than going directly to housing associations and private landlords, as they currently do. 

Whether or not these plans come to pass is something we’ll have to keep an eye on. With the market slowly cooling, and with things looking increasingly tricky for first time buyers, nothing is certain in the housing market right now. One thing we can promise you is that we’ll be here to keep you up to date on all the latest housing news, when it happens.