Last month, it seemed the housing market had steadied and interest rates were falling. The latest inflation figures, however, were unexpectedly high and there is now speculation they will remain that way for considerably longer than was previously thought.
","Slug":"watford-and-hertfordshire-property-market-update-june-2023","Date":"2023-06-26","news_category":{"Title":"SALES","Slug":"sales-and-lettings"},"Image":{"alternativeText":"","url":"https://ggfx-rolstons.s3.eu-west-2.amazonaws.com/i.prod/shutterstock_1044430048_cafbed8b08.jpg","url_sharp":{"childImageSharp":{"gatsbyImageData":{"layout":"constrained","backgroundColor":"#080808","images":{"fallback":{"src":"/static/02c307eaefa73d569f426dfe5c6e70cd/e9fbf/shutterstock_1044430048_cafbed8b08.jpg","srcSet":"/static/02c307eaefa73d569f426dfe5c6e70cd/47073/shutterstock_1044430048_cafbed8b08.jpg 210w,\n/static/02c307eaefa73d569f426dfe5c6e70cd/92751/shutterstock_1044430048_cafbed8b08.jpg 420w,\n/static/02c307eaefa73d569f426dfe5c6e70cd/e9fbf/shutterstock_1044430048_cafbed8b08.jpg 840w,\n/static/02c307eaefa73d569f426dfe5c6e70cd/92058/shutterstock_1044430048_cafbed8b08.jpg 1680w","sizes":"(min-width: 840px) 840px, 100vw"},"sources":[{"srcSet":"/static/02c307eaefa73d569f426dfe5c6e70cd/5dc88/shutterstock_1044430048_cafbed8b08.webp 210w,\n/static/02c307eaefa73d569f426dfe5c6e70cd/239c3/shutterstock_1044430048_cafbed8b08.webp 420w,\n/static/02c307eaefa73d569f426dfe5c6e70cd/61848/shutterstock_1044430048_cafbed8b08.webp 840w,\n/static/02c307eaefa73d569f426dfe5c6e70cd/831ed/shutterstock_1044430048_cafbed8b08.webp 1680w","type":"image/webp","sizes":"(min-width: 840px) 840px, 100vw"}]},"width":840,"height":480}}}},"Author":{"Image":{"alternativeText":"","url":"https://ggfx-rolstons.s3.eu-west-2.amazonaws.com/i.prod/Chat_GPT_Image_Aug_11_2026_05_13_35_PM_6d4b0b83dd.png","url_sharp":{"childImageSharp":{"gatsbyImageData":{"layout":"constrained","backgroundColor":"#282848","images":{"fallback":{"src":"/static/cd23a9f3ca94d5cd8963db9d82492ac5/1c9ce/Chat_GPT_Image_Aug_11_2026_05_13_35_PM_6d4b0b83dd.png","srcSet":"/static/cd23a9f3ca94d5cd8963db9d82492ac5/fbc98/Chat_GPT_Image_Aug_11_2026_05_13_35_PM_6d4b0b83dd.png 16w,\n/static/cd23a9f3ca94d5cd8963db9d82492ac5/914ee/Chat_GPT_Image_Aug_11_2026_05_13_35_PM_6d4b0b83dd.png 32w,\n/static/cd23a9f3ca94d5cd8963db9d82492ac5/1c9ce/Chat_GPT_Image_Aug_11_2026_05_13_35_PM_6d4b0b83dd.png 64w,\n/static/cd23a9f3ca94d5cd8963db9d82492ac5/bf8e1/Chat_GPT_Image_Aug_11_2026_05_13_35_PM_6d4b0b83dd.png 128w","sizes":"(min-width: 64px) 64px, 100vw"},"sources":[{"srcSet":"/static/cd23a9f3ca94d5cd8963db9d82492ac5/e789a/Chat_GPT_Image_Aug_11_2026_05_13_35_PM_6d4b0b83dd.webp 16w,\n/static/cd23a9f3ca94d5cd8963db9d82492ac5/ef6ff/Chat_GPT_Image_Aug_11_2026_05_13_35_PM_6d4b0b83dd.webp 32w,\n/static/cd23a9f3ca94d5cd8963db9d82492ac5/8257c/Chat_GPT_Image_Aug_11_2026_05_13_35_PM_6d4b0b83dd.webp 64w,\n/static/cd23a9f3ca94d5cd8963db9d82492ac5/6766a/Chat_GPT_Image_Aug_11_2026_05_13_35_PM_6d4b0b83dd.webp 128w","type":"image/webp","sizes":"(min-width: 64px) 64px, 100vw"}]},"width":64,"height":64}}}},"JobTitle":"Managing Director","Name":"Paul Gillespie FNAEA MARLA","Position":1},"Content":[{"id":"64987850202d8ad7a4958fd9","moduleType":"NormalText","moduleData":{"Text":"Last month, the housing market had steadied, and interest rates were falling. The latest inflation figures, however, were unexpectedly high, and there is now speculation they will remain that way for considerably longer than was previously thought. In response, lenders have already been raising their mortgage rates. As the inflation figures were only released in the latter part of May (and again in June), the housing market's reaction has not yet shown in the various indices. And, with the majority of homeowners on fixed-rate deals, it could take a while before its effects fully filter through.
\nEven the most recent data – Rightmove’s – is largely based on activity that took place before the inflation figures were released. According to them, May was a relatively good month - asking prices jumped 1.8% - nearly double the average rise for this time of year. Buyer demand was at healthy levels, too - down very slightly for top-end properties (-1%) but up for both second-stepper homes (+3%) and first-time buyer properties (+6%) when compared to the same period in pre-pandemic 2019. The average discount was a relatively small 3.1%.
\nIn contrast, Halifax’s index’s annual growth figures fell into negative territory - down 1% - generating quite a few headlines. It should be noted, though, that the completed sales figures it uses to compile its data are even further behind than Rightmove’s, so it is difficult to read too much into them. Nor did the papers mention that there had been no movement (0.0%), either up or down, in their house prices from the previous month.
\nNationwide’s figures come out roughly the same time as Halifax’s, and their prices were also relatively flat compared to the previous month. Annually, their data shows house prices had fallen by 3.4% from the artificial highs reached during the pandemic and the race for space. The only thing you really can surmise from all the differing indices is that we are going through a period of flux. Confidence has risen and fallen almost monthly as forecasts for inflation, the economy and the housing market have been constantly revised. The key drivers of inflation, and the uncertainty, are the war in Ukraine and the lingering effects of Covid, both of which are temporary in nature. The big question is, when will those inflationary pressures begin to ease? It only needs for inflation to come down for a couple of months, and confidence will quickly rebound, but if inflation appears to be getting too entrenched, it could have the opposite effect. In the meantime, rising mortgage costs are likely to dampen demand (and prices).
\nRobert Gardner, Nationwide's Chief Economist, says:
\n“A relatively soft landing remains the most likely outcome since labour market conditions remain solid and household balance sheets appear in relatively good shape.
\n“While activity is likely to remain subdued in the near term, healthy rates of nominal income growth, together with modestly lower house prices, should help to improve housing affordability over time, especially if mortgage rates moderate once the Bank Rate peaks.”
\nRental & Buy-To-Let Market
\nHigher mortgage costs are heaping more financial pressure on private landlords who cannot offset their costs against their profits. The Royal Institution of Chartered Surveyors (RICS) has now added its voice to the growing numbers expressing concern about its effect on the wider rental sector. They warn that the latest rise, in conjunction with the ending of no-fault evictions, could lead to more landlords selling up, squeezing the availability of rental properties and raising rents even further. And, if, as expected, mortgage rates keep on rising, the situation could get considerably worse.
\nAnalysis by Capital Economics shows that it is not good news for the government, either. According to their findings, if the base rate hits 5% and remains above 2.5% until the end of 2027, 13% (735,000) of private rental properties will be withdrawn from the market. This would result in a loss of revenue of £1 billion per year for the Treasury in Income and Corporation Tax. If, on the other hand, full tax relief on mortgages was re-established, the government’s coffers would be boosted by £400m and, at the same time, it would rein in rental inflation and encourage further investment in the sector.
\nIt is no surprise that rents rose again last month, up 1.2% across the UK and 1.8% in London. The smallest rises, on an annual basis, were to be found in the Southwest (6.7%), but rises were as high as 13.4% in Scotland, where the SNP have introduced more stringent rental regulations and, in London, annual rental inflation was running at 11.3%
\nCommenting on the latest data, Andy Halstead, HomeLet and Let Alliance CEO, says: “The level of demand somewhat depends on location, but as a broad rule, there is a shortage of rental properties to meet demand, with many prospective tenants facing a real battle to secure a property. This frenzied market is likely to see prices continue to rise in the coming months.”
\nAnd finally
\nWe are now officially in summer, and we are making it happen for many people selling and letting their homes across Watford and Hertfordshire.
\nSellers and landlords should start their journey with a property valuation. One of our local experts will answer any questions you have on the area, the market, the sales and lettings process and what Rolstons can do to help your property goals happen in 2023.
\nBuyers and tenants can get started by registering their details with us to receive property alerts. If you're registered, we will let you know as soon as a matching property hits the market, so you can book your viewing before the rush.
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FURTHER INFORMATION
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