Widespread panic was unnecessarily spread throughout the UK as predictions that the housing market would suffer in the current economic climate were ‘way wide of the mark’, it has been claimed.

This was the opinion of Nicky Gordon, the managing director of rapidly expanding Cumbrian housebuilder Genesis Homes, who has been buoyed by recent reports of house prices remaining stable amidst a suggested fear in some national media outlets that asking prices would be slashed to tempt buyers, while lenders have also started to reduce interest rates on mortgages to encourage movement in the market.

Nicky said: “Widespread fear has been sparked by the doom and gloom predicted for consumers, particularly those buying and selling houses, through the increase of interest rates and the possibility of house prices falling significantly.

“The reality of the situation is that interest rates are at an acceptable level of between 4.5-5.5%, which is the circa 70-year average that we should expect, and we have basically been spoiled for a number of years with interest rates being basically zero. We enjoyed it but we need to realise it couldn’t last forever.

“The current rate is still relative for lending and affordability testing, meaning people can still afford a mortgage and house prices are not expected to fall as was predicted by some.

“In fact, these predictions were way wide of the mark and what we are seeing now is that lenders are reducing their interest rates to tempt buyers into the market, and some rates are expected to drop under 4% in 2023 which is really positive news.

“The Government has set a target of 300,000 new homes to be built each year and we are going to fail miserably on that again in 2022, with the delays in building materials and labour shortages.

“So there is a real need for new housing, which will ultimately help with sustainability targets too, so we can see that there is no intention, particularly with the initiative of banks and mortgage lenders, for house prices to fall and we can only expect to see them increase in line with market expectations – albeit increase will be at more moderate than usual, pre-Covid levels.”

Nicky has taken further encouragement from words from the Bank of England governor Andrew Bailey who claimed that base rate increase expectations needed to fall even further.

He was quoted as saying that ‘the Bank Rate will have to go up by less than currently priced in financial markets’ and this suggested that rates would not increase to the unaffordable levels as first feared.

Nicky said: “This is further indication that the economic ‘disaster’ forecast by mainly tabloid doom mongers may have been blown out of all proportion, and that there are plans and expectations in place to help the economy return to some sort of stability.”

Nicky was critical of the Government’s ‘disastrous’ handling of the economy which saw mortgage interest rates dramatically jump to 6.5% and some lenders temporarily stop lending in reaction to former Chancellor Kwasi Kwarteng’s ‘mini-budget’.

He said: “The handling of the economy by Liz Truss and the Kwasi-economics was a complete shambles and that did nothing to reassure businesses in all sectors that the economy was in sound hands. The incompetence of the people in charge only increased panic that an economic problem was ahead.”

This week, Platform, owned by the Co-operative bank, became the first lender in more than a month to offer a five-year fixed-rate mortgage at under 5% when it introduced a 4.84% interest rate for borrowers.

The news coincided with online property agents Rightmove revealing that the average asking price of a house on the market has fallen by just 1.1% – which Nicky suggests is in line with usual pre-Covid falls in the run-up to Christmas.

He said: “Historically, before the days of Covid-19, the market slows in the winter months and those needing to sell will accept a slightly reduced amount, before a rise at the turn of the year when consumers approach a new year with added vigour for house buying and lifestyle changes.

“It will be interesting to see in the new year that we have returned to pre-Covid normality and the housing market remains on sound footing. I fully expect this to be the case.”