The power balance in the housing market is turning. Sellers who in 2021 received multiple bids and offered 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 in April 2022 than in than the year before: 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.
At the end of 2021, the average rate for a two-year fixed-rate mortgage with a 25pc deposit was 1.29pc. By April 2022, 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 continue to rise further. In May, the Bank of England 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 2022, the fall will be 3pc.
Because annual house price growth at the start of the year 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 hitting 1.5pc by December 2022. 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.