This is Armchair Economics with Hamish McRae, a subscriber-only newsletter from The i Paper. If you’d like to get this direct to your inbox, every single week, you can sign up here.

This is Armchair Economics with Hamish McRae, a subscriber-only newsletter from The i Paper. If you’d like to get this direct to your inbox, every single week, you can sign up here.

It’s a tough time for home buyers – and for sellers too.

Buyers are still suffering from high mortgage rates that average at more than 5 per cent for both a two-year and a five-year fix. That’s up half a percentage point from a year ago.

Sellers are facing soft demand, with prices falling slowly. Halifax reports that they were down 0.1 per cent last month and down 0.2 per cent this quarter. Nationwide calculated that they were down 0.6 per cent in May, though that was after a rise of 0.4 per cent in April.

While estate agents blame the war in the Middle East for the housing market’s current uncertainty, there are no early signs of things picking up. Indeed, Savills now predicts that prices overall will fall by 2 per cent this year, with the sharpest declines in the least affordable markets.

That sounds glum and for anyone in the business of selling homes it is. Given that there is a reasonable chance of the Bank of England increasing its interest rates this year – Deloitte notes that the markets expect rates to go up by half a point by Christmas – it’s hard to see much of a revival in the coming months. It looks as though global interest rates will rise this year as central banks lean against rising inflation and the European Central Bank is expected to raise rates on Thursday.

But as so often happens in economics, there is a silver lining to the clouds. The combination of stable or slightly falling prices coupled with rising money incomes means that homes are steadily becoming more........

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