Housing Market Looks Set To Simmer: Is It A Good Thing?

housing market simmer

This month has seen a sixth consecutive record hit of new houses coming to the market, with a new average of £369,968, a rise of 0.4% compared to last month, according to data from Rightmove.

As a result of this, Rightmove has revised their 2022 forecast of 5% growth to 7%, with record low stock volumes struggling to meet buyer’s demand.

Despite this, though, there are predictions amongst the property industry that the market might be about to come off the boil and hit a gentle simmer. We explore if this is coming, what the data shows and whether it will spell trouble for want-to-be homeowners.

What’s going on?

Currently the housing market is still experiencing rises in house prices, with the average asking price of new properties on the market up 0.4%, hitting the sixth consecutive record high of £369,968.

First-time buyers are facing these record prices as well as rising interest rates, meaning monthly payments are now 20% higher than at the start of the year. Rightmove were led to revise their original 2022 forecast of 5% growth to 7%, with record low stock volumes meaning there’s a struggle to meet buyer’s demand, with stock down 40% compared to June 2019.

Due to the rise in interest rates, the gap between short and long fixed-term mortgage rates is less than in previous years and has started to close, with the rates now virtually the same. As a result of this, it’s possible people may be encouraged to act now and buy a house in order to lock in a longer fixed-term mortgage rate.

However, the want to move and demand for houses looks set to dwindle as the year rolls on…

What could the future look like?

On the surface it may look as though the housing market isn’t set to slow down anytime soon, but this isn’t necessarily the case…

High buyer demand may be about to be wiped out by the two factors of people wanting to act now to buy a property due to increasing interest rates and the current cost of living crisis and affordability concerns.

As a result of this, it’s predicted that we may be about to see a slowdown in the second half of the year and the signs may already be right in front of our eyes.

Whilst buyer demand looks to be high, demand levels are actually down 7% compared to last year’s market, suggesting a cool down may be on the horizon.

The number of new sellers coming to the market is up 13% compared to this time last year, indicating demand and supply may finally be more balanced, further putting some downward, cooling pressure on house prices.

What have the experts said?

“The challenges presented by rising interest rates and the cost of living will no doubt have an effect throughout the second half of the year, as some people reconsider what they can afford. However, there is also anticipation among would-be home-movers that personal finances may become even more stretched in the coming months, with further interest rate rises expected and the energy price cap jumping again in October.” says Tim Bannister, Rightmove’s Director of Property Science, suggesting that the cost-of-living crisis could be responsible for the cool to the housing market we’re about to see.

However, Tim also said “Having more new sellers this month is a win-win for the market, as these sellers will likely achieve good prices for their homes given the sixth asking price record in a row that we’ve now seen, which may help to explain the increase in new stock coming to market over the last year. For those looking to buy, it means more choice, and a slight easing in competition against other buyers while the market is still moving very quickly.

“While more choice is welcome news, the number of homes available remains well below the more normal levels of 2019 and is unable to satisfy the continued high demand that we’re seeing. Though a softening in demand is moving the market from a boil to a simmer, it remains 26% up on 2019. With such an imbalance remaining between supply and demand, prices look underpinned, and we would therefore only expect typical smaller seasonal month-on-month falls, rather than more significant price falls in the second half of the year.”

This suggests that we don’t need to be worried about an extreme crash in house prices as the second half of 2022 rolls on.

Marc von Grundheer, Director Benham and Reeves estate agents in London, believes the market will actually remain upbeat for the rest of 2022, stating “While buyer demand may be cooling compared to the dizzying heights of the peak pandemic market, there remains a huge imbalance between buyer appetites and available stock levels. The increasing cost of borrowing and the wider economic backdrop may cause buyer demand to continue to cool further this year, albeit gradually. However, even though a fresh wave of homes are coming to market, this boost to stock levels is unlikely to rebalance the scales. Therefore, we can expect property values to remain buoyant for the remainder of 2022.”

It remains to be seen what the outcome will be on the housing market, though the signs look to point in the direction of a slight cooldown.

However, with June hitting a sixth consecutive record for the average asking price, it begs the question, of whether supply will ever catch up with demand or there will be a constant imbalance, keeping house prices on the rise.


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Millie is a perfectionist with a passion for property and writing articles. You’ll find her researching the latest housing trends and the newest up and coming areas worth investing in.

About Millie Archer 122 Articles
Millie is a perfectionist with a passion for property and writing articles. You'll find her researching the latest housing trends and the newest up and coming areas worth investing in.

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