What will happen to house prices in 2022?

It’s difficult to predict what will happen in the future, especially when it comes to something as complex as the UK housing market.

According to Which?, house prices rose by 10% in the year to March 2022, but experts expect the housing market to slow as this year unfolds. However, there are many differing opinions. In this article, you’ll read about some of the predictions for house prices in 2022.

What’s been happening in the property market?

In the second half of 2021, house prices started to soar. This has continued through 2021 and into the first half of 2022.

The huge growth in 2021 was largely thanks to the government’s temporary cut in Stamp Duty and a release in pent-up demand following successive lockdowns.

The Stamp Duty cut meant that homeowners could save up to £15,000 if they purchased a property before 1 July 2021, or up to £2,500 if they completed before the end of September.

There was a surge of transactions around these two dates. Despite experts predicting that the end of this Stamp Duty holiday, along with the end of furlough in October 2021, would lead to a significant slow in house sales, demand has remained strong.

Factors that could affect the house prices in the UK in 2022

Several factors could affect the UK housing market in the coming year. These include:

Interest rates

Low interest rates have cut the cost of borrowing in recent years, making mortgages more affordable for many.

However, now interest rates have started to rise, this could put pressure on house prices. This is because mortgage payments will rise, making it harder for many people to afford the loan they need to buy.

The economy

Office for National Statistics (ONS) figures show that GDP in the UK fell by 0.1% in March after no growth in February. A slowing economy is likely to lead to uncertainty and job losses, making people less confident about buying a home.

This could slow house price growth or, in the worst-case scenario, bring down prices.

Supply and demand

House prices are largely determined by the desirability of the local area and how many similar properties are currently on the market.

Following the 2020 pandemic lockdowns, there was a shift in people wanting to move out of the cities and into the country. Many rural locations saw huge growth in housing demand, which drove up the property prices in those areas.

Changes in working patterns are likely to support demand.

House price predictions

As you might imagine, predicting the future of house prices is a difficult business, and experts have mixed views.

Estate agent Hamptons predict a rise of 3.5% in 2022  while the property portal Zoopla has similar projections, forecasting a 3% rise this year.

Halifax has suggested that prices could remain flat during the year, or grow by as little as 2%.

Russell Galley, the managing director of Halifax, says: “With the prospect that interest rates may rise further in 2022 to subdue rising inflation, and with government support measures phasing out, greater pressure on household budgets suggests house price growth will slow considerably.”

A note of caution

Overall, most experts expect the housing market to continue its growth in the short term.

However, the rises in inflation will lead to further increases in interest rates which, when combined with the cost-of-living crisis, could mean house price growth slows considerably as we reach the end of the year.

It’s important, though, to remember that price predictions aren’t always accurate. For example, the Times reports that, in June 2020, the Centre for Economics and Business Research (CEBR) forecasted that house prices would drop by 8.7% in 2020. According to the Office for National Statistics, however, they actually grew by 8.5%.

Forecasts are helpful but must be taken for what they are. No one can know for sure what will happen to the housing market!

Get in touch

While we can’t control the value of your home, we can help you to build a financial plan that will help you to reach your life goals. To find out more, email mail@delaunaywealth.com or call us on 0345 505 3500.

Please note

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.