The power balance in the housing market is turning. Sellers who last year received multiple bids and offers 20pc higher than they asked are now rushing to shift homes before prices fall.
A race to lock in sales ahead of a widely expected slowdown has meant more sellers agreed a price last month than in April 2021: when the frenzied market was midway through a stamp duty holiday rush.
Rapidly rising mortgage rates and the cost of living crisis have poured cold water on demand. So is this the last hurrah of the housing market boom? “Yes, definitely,” according to Karl Thompson, of the Centre for Economics and Business Research, a consultancy.
Here’s why it could be the best time to sell your home.
The highest price you will get
A busy market so far this year has been driven by buyers racing to lock in cheap mortgages before interest rates rise. Mr Thompson said he thinks the housing market has peaked.
Six months ago, the average rate for a two-year fixed-rate mortgage with a 25pc deposit was 1.29pc. In April, it was 2.35pc. This was the sharpest increase in rates over any six-month period since the end of 2003, according to Pantheon Macroeconomics, a research group.
Rates will rise further in May. The Bank of England last week raised the Bank Rate to a 13-year high of 1pc and more are on the way. Rising mortgage costs, which will hit buyers just as they are grappling with the cost of living crisis, will quickly depress demand.
From April to June, CEBR has forecast prices will flatline before falling between July to September, by around 2pc. In the last three months of the year, the fall will be 3pc.
Because annual house price growth at the start of 2022 was so high, home values will still be 5.4pc higher year-on-year by the end of December, but over 2023, they will fall by 2.9pc.
CEBR’s forecasts are based on the Bank Rate hitting1.5pc by the end of this year. But as inflation forecasts continue to increase, larger increases could be in the pipeline. Capital Economics, another consultancy, expects the Bank Rate to be double this, at 3pc, in 2023.
Prices are cooling
Simon English, a buying agent in London and the Home Counties, said a property being sold off market in West Sussex was worth £3.5m in January and his clients walked away. However, last week the sellers said they were happy to drop to £3m.
“I can negotiate a little more now. Twelve months ago it was almost impossible,” he said. “After lockdown, people were bidding on everything and paying anything. They are a lot more discerning now, they are more cautious. If you’re thinking of selling in the foreseeable future, you want to sell now.”
More people are selling
The number of homes being sold is rising. Appraisals done by Knight Frank in April were 3pc higher than the five-year average (excluding 2020) – a marked shift compared with the severe shortage of sellable homes in 2021. Mr Thompson said: “A lot of people are waking up to the fact that this is probably the best time to sell.”
Mr English added: “There has been a noticeable increase in the number of available properties since the interest rate rise. That’s partly because it is traditional time to sell a home. But there are several houses around the £1.5m mark that I was told weren’t coming up for sale until the autumn which have now listed.”
Charles Probert, of Knight Frank’s Hereford & Worcester office, said more sellers would come to market over the next few months. They are keen to lock in deals quickly before mortgage costs rise and hit how much their buyers can borrow.
The median time from instruction to an offer being accepted is now just 56.5 days in April, according to Knight Frank – the shortest length since June 2021.
Mr Thompson added: “Supply is now significantly higher than it was a few months ago, and in a lot of regions – Wales, the North East, the North West, the Midlands, London and the South West – supply is now moving faster than demand.”