One of the most surprising side-effects of the Coronavirus pandemic here in the UK has been that house prices have continued to rise, and the property market has enjoyed an extremely healthy and buoyant period. As an example of just how buoyant, an estimated 1.5 million homes are expected to be sold by the time we end 2021, cementing this year’s place as the busiest year for the housing market in 15 years.
So, after a fantastic year for the property industry, what might 2022 have in store? Well, none of us know for sure, but predictions can be made based on statistical data and a view of the current situation in the property market.
Zoopla, the property portal website, are predicting that a turning point in the rate of house price growth will occur. They predict a rapid slowing down of property price increases from 6.6% down to just 3% by the end of 2022.
The BBC reports that the Office for Budget Responsibility (OBR) agrees with Zoopla. It predicts that house prices will see a slowdown to 3.2% in 2022 from their number of 8.6% Although the numbers aren’t exactly the same the important prediction is that property price increases will slow down in 2022.
What Are Zoopla’s Predictions for The Housing Market in 2022?
Zoopla’s summation is that the high levels of equity that many homeowners will have built up in their properties during the increase in house price growth over the past year and a half, along with the shortage of homes on the market and a continued desire for more space prompted by the pandemic, will see a continuation in house price growth well into 2022. Their research is showing a significantly higher percentage (22%) of people currently wanting to move, compared to the average in previous years of around 5%.
However, a slow down is predicted to occur mid-2022 based on a few factors, such as:
- a possible increase in mortgage rates
- a likely increase in taxes to help pay for the measures brought in during the pandemic
- an increase in the cost of living
Indeed, Laura Suter who is Head of Personal Finance at investment platform AJ Bell, gives a warning to homeowners that the clock is ticking on record low mortgage rates and it’s a case of when, not if, the rates will rise. The OBR agrees, predicting mortgage rates are likely to rise from their record lows. These mortgage rate increases are predicted to be part of the reason why the market might slow later in 2022.
What Might All This Mean for You?
As the market is likely to stay buoyant until well into the New Year, speed will be of the essence as properties are being snapped up in a fast-moving market and choice of property type might well be reduced. Having a mortgage agreed in principle will be very helpful as you begin your house hunting expedition! This is especially true for first time buyers who will be faced with a competitive property market where demand is outstripping supply.
The message remains the same for seasoned homeowners – the current market situation is likely to remain for some time into 2022, so now might be the time to sell if you are considering a move. It continues to be a seller’s market and will be so for some months to come. Bear in mind that you will be faced with the same competitive and short supplied market when you are looking for your new property.
Although price growth will slow in 2022, this does not mean that the market will hit a slump and the growth predicted is still very healthy.