Tuesday, September 27, 2022
HomeLifestyleUK property market set for 'record breaking' year - homeowners profits predicted...

UK property market set for 'record breaking' year – homeowners profits predicted to rise


Last year, data from Hamptons revealed those selling up made an average profit of £95,360. That’s only going to carry on. In fact, I believe 2022 is the year it will smash through the £100,000 threshold.

This upward shift may only be a few thousand pounds more but the significance of this moment is jaw dropping.

The idea that the average person will walk away with £100,000 as they make their next property move didn’t seem possible 10 years ago.

But the pandemic has accelerated everything.

We’ve seen growth for nearly ten years but the past 22 months has really seen the speed accelerate and estate agents are already reporting a busy start to this year – with prices set to increase even further.

READ MORE: ‘It disappears’: Mrs Hinch fan shares how to get rid of window condensation – ‘a godsend’

The boom has been aided by the fact interest rates are still very low and low-deposit mortgages are becoming more readily available.

Combine this with the gradual unlocking of the economy as the Omicron risk subsides, and the traditional Spring bounce, and it creates perfect market conditions.

So much so, I believe we will see much of 2022’s price rise within the first few months of the year.

As sales pick up it will mean those moving on can expect to see high amounts of cash flowing into their accounts. Homeowners selling in 2021 banked on average nearly £95,000.

With home values at an all-time high, even a modest increase will see sellers make a six digit profit.

But although many will see this as great news, it is, of course, a mixed picture. Buying a home looks set to become even more out of reach for hard-pressed first timers and increases could be quickly cancelled out if sellers go on to re-buy.

It is likely then that many people will look to the growing rental market. Some may decide to bank their profits, sit on them and hope the market levels out before making their next move, while others will be left with no option but to rent as they start the process of saving enough money to be able to afford a deposit on a new home.

These two factors could see rental costs rise too, adding to the burden in an already difficult period where people face having to cope with increased inflation.

In fact I fear inflation could deal a double blow to the housing market. Firstly, people will have a lot less in their pockets to spend. The rate at which prices are rising is at its highest since early 1992 thanks to increased food and fuel costs around the world.

In the next few months energy bills could rise by another 50 percent once the price cap is removed.

Potential first time property buyers won’t feel confident about taking a new financial commitment and will adopt a ‘wait and see’ approach, starving the market of buyers.

The second blow could come from The Bank of England. They have limited ways of pushing down inflation and will have to resort to increasing interest rates as a way of leaving less money in people’s pockets. If they spend less, inflation will fall.

The trouble is that these price rises aren’t just on consumer goods that are seen as a luxury. That’s nonsense.

These are actual living expenses, many of which are simply unavoidable. Who’d want to choose between food or water, heat or light?

So interest rates could rise but inflation may not be curbed. Might that lead to even higher rates? Possibly so.

For the millions with a mortgage – or thinking about getting one – that could spell disaster. That’s why we need to watch these next three months very carefully indeed.

Jonathan Rolande is the Director of House Buy Fast.



RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisment -

Most Popular

Recent Comments