UK house prices: Will house prices go down in 2022?

Martin Roberts discusses the rise in house

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House in the UK surged to hit a new record in June, according to property website Zoopla. The site said the average house price was 5.4 percent higher than the same month a year ago. Supply has failed to keep pace with demand since January 2021, with no sign of an imminent rebalance. But does this mean house prices will go down in 2022?

Rising demand for homes will last well into 2022, according to property website Zoopla.

Buyers are seeking more space in their homes in the wake of lockdowns during the coronavirus pandemic.

This search for space has seen average house propelled by 7.3 percent over the past year – reaching a new high of £230,700.

Houses, in particular, are more desired, with flats less attractive to buyers.

However, all property types are in short supply according to Zoopla, which is, in turn, seeing rise.

Zoopla said: “Demand for houses is twice as high as typically seen at this time of year between and 2019, accelerating away from demand for flats, creating a disparity in average price growth across the two property types.

“House are being supported in part by a severe shortage of homes for sale, with stock levels down some 25 percent in the first half of the year compared to 2020.”

The property website said house are on the rise, but the growth rate for flat prices is lagging behind at 1.4 percent.

Will house go down in 2022?

The biggest impact on the housing market in the last year has been the extension of the stamp duty holiday.

It was originally due to end in March 2021, but will now continue until October – tapering off each month from June this year until the end of September.

As a result of the stamp duty holiday, the housing market has been flooded with new buyers seeking homes before the tax break ends.

Interest rates have also remained low with the Bank of England supporting borrowing amid the pandemic.

Rates are now beginning to climb but are still below pre-pandemic levels.

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Forecasts for 2022 are difficult to predict at this point and many property experts are divided about the projections for that time.

No one however expects there to be a massive drop off in 2022. Instead many believe price rises will continue at the same rate or drop slightly.

Mike Fitzgerald, executive chairman at Coulters Property told “The housing market recovered a lot faster than anticipated at the start of the pandemic.

“Lockdown and the rise of remote working made many people reconsider where they want to live, which in return has created a backlog of people wanting to move house.

“There is also controversy around the stamp duty holiday as it’s believed that this has mainly benefited people buying second properties as investments.

“The rising house also make it much harder for first-time buyers to get on the property ladder.

“However, this increase of house prices may be short-lived, especially if nationwide lockdown restrictions are imposed again.”

John Chater, the founder of The Branded Tile Company, said he does not believe 2022 will bring massive uproar to the UK housing market.

He told “Why, well with the seismic shift in working behaviours enforced by Covid across the world, people now want a home that’s not just a for the night and more than a make-do ‘WeWork’.

“We now want more – more green space, more workspace, more real ‘living’ space and not the one size all that the developers have churned out for the past 20 years.

“We’re seeing more customers looking at their homes with a critical eye and feeling emboldened to move on out of a property that fails to fit their new world view.

“The market for well-appointed, well located smaller homes is booming, as is the market for interior improvements and new owners putting in their own personal touches.”

Capital Economics believes house price inflation will average three percent per year until the end of 2024.

Pantheon Macroeconomics believes the imbalance between the supply and demand for properties will leave to year-on-year growth of close to nine percent for the coming months.

But the firm then believes house prices will decline after the Stamp Duty holiday ends in October with prices rising by 2.5 percent over the course of 2022.

However, Savills forecasts prices will increase five percent across the UK in each of the next five years to 2025.

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