‘House price growth will slow considerably’ in 2022 after huge £20k price surge this year
House prices: Expert discusses 'interesting' pricing differences
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The average UK house price is now £272,992 compared to £252,235 a year ago – a whopping rise of £20,757. Annual house price growth is currently at 8.2 percent, having peaked at 9.5 percent in May this year. This was the strongest rate of annual growth since July 2014.
Average house prices are almost £34,000 when compared to the beginning of the coronavirus pandemic in March 2020.
The average UK house price was £239,176 in March 2020, compared to £272,992 now.
Quarterly house price growth is now at 3.4 percent – its strongest level since 2006.
However, house price growth is likely to “slow considerably” next year, according to a Halifax property expert.
It’s likely interest rates will rise further in 2022 to overcome rising inflation.
Unlike the beginning of last year, Government support measures, like the furlough scheme and the stamp duty holiday are no longer in place, putting more pressure on household budgets.
This suggests “house price growth will slow considerably”, according to Managing Director at Halifax, Russell Galley.
He continued: “Interest rates will remain low by historic standards and property prices will continue to be supported by the limited supply of available properties.
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“We expect, therefore, that house prices will maintain their current strong levels but that growth will be broadly flat during 2022 – perhaps somewhere in the range of zero percent to two percent.
“Even with that range in mind, there is still a large degree of uncertainty around this forecast, particularly the extent to which savings accrued during the pandemic continue to boost housing transactions and prices, and how lasting the recent shifts in housing preferences prove to be.
“Indeed, it is prudent to highlight the potential for house prices to rise or fall by much greater margins next year, depending on how COVID-19 and its variants continue to impact the economic environment and the potential for any further policy interventions.”
One of the “long-term issues” for the housing market is the inequality between generations across the income spectrum.
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Some young and lower-paid individuals are struggling to afford good quality housing that meets their needs due to the inaccessibility of the current housing market.
According to Mr Galley, the inequality between generations has “intensified” over the last two years, increasing the need to prioritise housing availability and affordability.
In fact, two-thirds (67 percent) of the UK public don’t believe the housing market is currently helping people access affordable and quality homes in their area, according to data from Halifax.
The property expert added: “The need to ensure that all homes – both new and old – support the UK’s sustainability targets and build towards a greener future will also become an increasingly important factor in the housing market, with homes given the highest energy ratings already worth up to £40,000 more on average than less sustainable properties.”
Surprisingly, both homeowners and renters agree that house prices are the biggest issue facing the market.
They are uncertain whether the industry will be able to deliver, affordable, quality homes the UK needs to recover from the pandemic.
As housing stock hits record lows, and demand continues to outstrip supply, house prices could continue to increase.
Furthermore, the public believe issues around affordability are likely to get worse, with almost two-thirds (63 percent) believing house prices will continue to increase over the next three years.
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