Real estate experts say UK house price growth will slow in 2022 | house prices

[ad_1]

Property experts have predicted that Britain’s housing market will slow significantly in 2022 as borrowing costs rise and household budgets come under increasing pressure.

After a year of price hikes driven by stamp duty holidays across the UK and changes in the types of property being bought and sold, forecasters typically suggest house prices will grow by 3 to 5% next year.

The latest figures from the Nationwide Building Association showed annual price growth of 10%.

However, in London’s richest boroughs, price increases are expected to exceed those recorded this year, and could outpace the figure in the UK as a whole.

Real estate firm Savills said it expects 6% growth in key London boroughs in 2022, up from 3.2% in 2021, but renewed uncertainty over Covid could drive that growth later in the year.

Savills said prices are starting to rise again for apartments in key areas, as people have started moving back into town or looking for a place to use while they’re there.

Frances Clasey, associate director at Savills, said: “Activity levels have risen significantly in recent months, but the renewed uncertainty around the Covid-19 virus is adding an additional, unwelcome layer of uncertainty that is likely to push the expected rebound in values ​​even further in the coming months. 2022.

However, we believe that it is a question of when and not whether prices rebound, especially with more pent-up demand, so central London remains a market to watch closely. It can bounce back surprisingly fast.”

The London market has fallen as wealthy buyers leave the capital within months of working from home, and overseas travel restrictions have dampened interest from buyers from other countries.

The market has been boosted elsewhere by the “race for space” during the pandemic along with government initiatives such as stamp duty holidays, the most recent of which ended in September, and cheap mortgage deals thanks to record low interest rates.

The Bank of England unexpectedly raised interest rates for the first time in three years in December in response to mounting concerns about inflation, which reached a decade-high of 5.1% in November.

However, borrowing costs are still lower than they were before the pandemic, and analysts believe any future price increases will be limited as they look far from over.

Savills expects house prices across the UK market to grow 3.5% next year as the economy recovers from the pandemic and the shortage of homes for sale continues to support prices.

The Royal Institution of Chartered Surveyors expects home prices to end next year 3-5% higher than they were at the start of the year. Tarrant Parsons, an economist at Rics, said: “2021 has been an exceptionally active year for the housing market, with transactions near record levels. However, even though more homeowners are seeking more space and various incentive programs… the Transaction activity for the next 12 months will inevitably slow down.

All other factors being equal, higher borrowing costs will dampen demand across the market to a certain extent. The main challenge will be around stock shortages in the market with stock back near historical lows, showing little sign of easing.”

Halifax, one of the largest mortgage lenders, said earlier this month that it expects price growth to slow significantly as a result of the rising cost of living. It expects prices to grow from zero to 2% in 2022. This compares to increases of 8% recorded so far this year and 6% in 2020. It estimated the median home price in December at £272,992, nearly £34,000 higher than at the beginning of the epidemic.

Property website Rightmove forecast home prices to rise by 5% nationally and 3% in London. Zoopla, a competitor, expects 3% next year and expects 1.2 million transactions, down from 1.5 million in 2021 but in line with the average number of transactions over the past five years.

Robert Gardner, chief economist at community-building firm Nationwide, did not put a number on how far to expect prices to move in 2022. “The outlook remains very uncertain. The strength of the market has surprised us all in 2021 and we could do that again next year,” he said. .

[ad_2]