Strong demand in the market continues to fuel growth

Over the last couple of weeks, house price indices from Zoopla and Nationwide have both suggested a gradual slowing in price growth, but the latest (June) index from Halifax contradicts this. It points to a significant acceleration, with values rising to +13% year-on-year. Whether or not this is just a statistical aberration is hard to tell, but it highlights the surprising resilience of the market, and leaves no doubt that the supply/demand imbalance remains an appreciable force.

High demand has had other consequences for investors lately. High demand amongst tenants has prompted a drop in void periods, as reported by Propertymark towards the end of last month and, of course, it has also helped to sustain rising rental values. But while this all helps to make it an attractive market for investors, that’s not to say that tenants are feeling poorly-served. Indeed, new results from the government’s latest English Housing Survey suggest that the great majority of renters are happy with their living arrangements.

However, we are living through difficult economic times and conditions continue to change. This week, for example, the chief executive of Ofgem revealed to MPs that previous estimates of imminent energy price rises might actually have been too low. Energy costs have soared in recent months and if they continue to do so, then tenants will see their budgets increasingly stretched, leaving less capacity to pay higher rents over the coming months. It’s a situation that investors will be watching closely.

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