House Prices Increases Set to Slow Down in 2022

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Halifax have published their latest set of data and they have forecasted that the residential property price growth is set to slow over the next 12 months.

In 2021, annual house prices hit a 17-year high as expectations were surpassed. It is expected that as interest rate hikes and cost of living increases, this will slow down the recent surge in values.

The 9.8% year-on-year increase for December was the biggest since July 2007 and represented the strongest calendar year growth since 2004.

Furthermore, Halifax went on to explain that the average price for a property is now £276,091. This is £24,500 more than December’s 2020 figure which is the greatest increase since March 2003.

As for month-on-month growth in prices, it stands at 1.1% whilst the quarter-on-quarter increase is 3.5% which again, was the strongest since 2006, owed in part to the widening supply-demand imbalance.

More specifically, London had the slowest price growth of 2.1%, however prices in the capital remain the most expensive in the UK. The average cost for properties in London is currently £535,351.

Halifax Managing Director, Russel Galley, commented: “The housing market defied expectations in 2021… We saw the average house price reach new record highs on eight occasions, despite the UK being subject to lockdown for much of the first six months of the year.”

“Looking ahead, with the prospect that interest rates may rise further in 2022 to subdue rising inflation, and with government support measures phased out, greater pressure on household budgets suggests house price growth will start to slow’

Other property professionals agree with this view.

Anthony Codling, founder of a PropTech firm, said: “The Halifax House price index reached a record high in 2021 of £276,091 as a perfect storm of lockdowns, stamp duty holidays and shortages of homes for sale pushed house prices ever higher. However, the record 5rise of 2021 may be followed by the big squeeze of 2022 as rising energy bills, mortgage rates and inflation, frustrate family finances. We do not believe house prices will fall in 2022, but the big squeeze is likely to subdue house price growth in the coming months.”

The CEO of The Guild of Property Professionals, Iain McKenzie, also commented his thoughts: “The housing market starts 2022 in a very strong position. Valuation requests from home-owners are a fifth higher than the year before, mortgage approvals are the highest they’ve been for years, and the pandemic appears to be on the wane.

“Further interest rate rises are likely this year, but while demand outstrips housing, we expect that prices will continue to rise this year, albeit at a much slower pace than we saw in 2021.”

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