Last year Hamptons data revealed that those who sold made an average profit of £95,360. It will only continue. In fact, I think 2022 is the year it will cross the £100,000 threshold.
This upward shift may only be a few thousand pounds more, but the significance of this moment is breathtaking.
The idea that the average person will walk away with £100,000 on their next move didn’t seem possible 10 years ago.
But the pandemic has accelerated everything.
We’ve been growing for almost ten years, but the last 22 months have really seen the speed pick up and estate agents are already reporting a busy start to the year – with prices set to rise further.
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The boom has been aided by the fact that interest rates are still very low and low deposit mortgages are becoming more readily available.
Combine that with the gradual unlocking of the economy as Omicron risk wanes and the traditional spring rebound, and it creates perfect market conditions.
So much so that I think we’ll see much of 2022’s price rally in the first few months of the year.
As sales pick up, that means those moving can expect to see large amounts of cash flow into their accounts. Owners selling in 2021 have taken in an average of nearly £95,000.
With property values at an all-time high, even a modest increase will see sellers make a six-figure profit.
But while many will see this as great news, the picture is of course mixed. Buying a home looks set to become even further out of reach for beleaguered first-timers and increases could quickly be reversed if sellers keep buying back.
It is then likely that many people will turn to the growing rental market. Some may decide to bank their profits, sit on them and hope the market stabilizes before making their next move, while others will have no choice but to rent when they start. to save enough money to be able to pay a deposit. on a new house.
These two factors could also lead to higher rental costs, adding to the burden in an already difficult time when people have to deal with increased inflation.
In fact, I fear that inflation will do a double blow to the housing market. First, people will have a lot less to spend in their pockets. The rate at which prices are rising is at its highest since early 1992 thanks to rising food and fuel prices around the world.
Over the next few months, energy bills could increase by another 50% once the price cap is removed.
Potential first-time home buyers will not feel confident about making a new financial commitment and will adopt a wait-and-see approach, starving the buyer market.
The second blow could come from the Bank of England. They have limited means of bringing inflation down and will have to resort to raising interest rates to leave less money in people’s pockets. If they spend less, inflation will go down.
The problem is that these price increases do not only concern consumer goods considered as a luxury. It’s absurd.
These are real living expenses, many of which are simply unavoidable. Who would want to choose between food or water, heat or light?
Thus, interest rates may rise, but inflation may not be contained. Could this lead to even higher rates? Maybe so.
For the millions of people who have a mortgage – or who are considering getting one – this could spell disaster. That’s why we have to watch very carefully over the next three months.
Jonathan Rolande is the director of House Buy Quickly.