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Halifax Points to Growing Pressures on Private Rental Sector and Slump in House Prices

Halifax has recently flagged concerns regarding the private rental sector in their standard housing market update, highlighting that the sector is currently navigating challenging waters. The banking giant’s monthly index indicates that sky-high interest rates are not the sole issue troubling landlords. There’s also increasing apprehension about potential changes in the rental market regulations in the future.

Kim Kinnaird, Director of Halifax Mortgages, expressed her concerns, noting, “It remains to be seen how many [landlords] may choose to exit and what that could mean for the supply of properties available to buy.”

Kinnaird further commented on the state of the housing market, noting that the escalating interest rates, coupled with a tumultuous mortgage market, have also left a mark on house prices. In July, the UK witnessed a slight dip in average house prices, with a monthly decrease of -0.3%, which translates to approximately £1,000 in real terms.

Kinnaird pointed out, “While this was the fourth consecutive monthly decrease, all have been smaller than -0.5%. In reality, prices are little changed over the last six months, with the typical property now costing £285,044, compared to £285,660 in February. The pace of annual decline also slowed to -2.4% in July, versus -2.6% in June. These figures add to the sense of a housing market which continues to display a degree of resilience in the face of tough economic headwinds.”

Kundan Bhaduri, director of the London-based property developer, The Kushman Group, echoed the sentiment. He remarked, “At long last the ongoing fall in house prices will achieve what many have been waiting for, namely a chance to get onto that first rung of the property ladder. This decline is helping improve affordability for first-time buyers, who have been struggling to enter the market due to high deposit requirements and rising costs of living. This slowdown in house price growth was a long time coming and is a perfect opportunity to rebalance the market and prevent a potential bubble.”