2021 will be remembered as a remarkable year for UK house prices.
Figures from the Office for National Statistics (ONS) show that average prices jumped 10.2% over the year to October, peaking at an even more impressive 12.3% in September.
In real terms, that represents an increase from just under £250,250 to nearly £270,000 in the space of 10 months.
If you have a property portfolio, you may well have seen some of these returns on your assets.
Equally, if you’d been planning to create a portfolio yourself but never got round to it, this may be a stark reminder that there’s often no time like the present for getting into the market.
All this growth may leave you wondering what’s next for house prices. After all, it seems unlikely that 2022 can keep pace with growth like this.
Let’s take a look at expert predictions for what could happen this year.
A decline in the rate of growth
The first thing to consider is the factors that experts think could affect the market in 2022.
There were lots of reasons that the market boomed in 2021, including pent-up demand and a Stamp Duty holiday, as the pandemic initially brought the housing market to a standstill in 2020.
However, now that these short-term influences have come to an end, their effect on the market may have totally waned.
Accordingly, consumer rights group Which? noted a lack of supply in the market alongside the risks of inflation and interest rate rises as factors that could hamper market growth in their predictions for mortgages and house prices in 2022.
As a result, their analysis of various forecasts suggests a slowdown in price growth to between 3% and 4% this year.
Meanwhile, back in October, FTAdviser pointed to uncertainty around Brexit, the continued effect of Covid-19, and inflation pushing up the cost of living as factors that could all harm the housing market’s prospects this year.
Elements such as these have led property search site Zoopla to predict 3% growth across the UK market.
This rate varies region to region, with the Zoopla House Price Index forecasting growth of just 2% in London, and just 2.5% in Scotland and the south-west, east, and north-east of England.
As these predictions suggest, it seems that experts are expecting a decline in the rate of growth compared to the dizzy heights of 2021.
Normal business resumed
Of course, as often happens with house market data, some experts see the outlook for the market in a more positive light.
For example, in their residential forecast, Savills also predicted a 3.5% rise in UK prices in 2022. But crucially, the estate agent has predicted that this year’s growth will still be part of a long-term trend for the market, culminating in a 13.1% increase over the next five years to 2026.
Similarly, Hamptons also forecasted a 3.5% increase in their autumn executive summary, citing low interest rates and any remaining demand created by lockdowns to keep the market turning over.
While these figures are obviously lower than the skyrocketing numbers seen in 2021, they’re still above the pre-pandemic levels seen in 2019. This means the outlook may not be as negative as it appears.
In fact, Rightmove takes an even more optimistic approach, predicting that the asking price for a home will actually rise by 5% this year.
The property search site even goes as far as forecasting growth of 7% in four regions of the UK: Scotland, the West Midlands, the south-west, and Yorkshire and the Humber.
Across the board, this means some experts actually believe the market may be returning to the slower and steadier levels of growth seen in the past before the uncertainty created by the pandemic.
Work with us
House price predictions are notorious for contradicting one another like this. That’s why it can often be sensible to work with a professional who can help you make the right decisions for your personal circumstances.
If you’d like to find out how to build a property portfolio that works for you, please get in touch with us at ProSport.
Email firstname.lastname@example.org or call 01204 602909 to find out more about how we could help you.
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