What trends will dominate the housing market in 2022?

Last year house prices rose to new heights and the sales market was at its most active since 2007. Last year’s property boom was fuelled by a desire for more space, a mismatch in supply and demand, and the temporary Stamp Duty holiday. Looking ahead, what trends will dominate the housing market in 2022?

Strong finale

More than 1.5 million homes were set to change hands in 2021, while the average UK house price hit a record high of over £270,000 in November1. According to the latest figures, the annual growth rate is at 8.1%. Will this growth be sustained into 2022?

Uncertain outlook

One prominent estate agent2 has predicted that house prices will increase by 7% in 2022 in a ‘best case’ scenario, though it also made a ‘downside’ prediction of 2% growth. It remains to be seen how much impact an expected rise in the Bank of England’s base rate will have on the market.

Robert Gardner, Nationwide’s Chief Economist, thinks any increase will have minimal effect given that most mortgages are now on fixed rates, “Even a 0.4% increase in rates (to 0.5%) is likely to have a modest impact on most borrowers who are on variable rates. For example, on the average mortgage, an interest rate increase of 0.4% would raise monthly payments by £28 to £625.”

Regional differences

Another pattern to watch out for is how regional discrepancies change. Variation is currently high across different regions. For example, the North West of England was the strongest performing region in 2021 with annual growth of 10.4% (to October) compared to London’s rise of just 2.8%. Yet, the average property price in the North West (£205,881) remains far below the average in the capital (£514,907).

House prices also saw strong growth in Scotland, with the average property now costing £190,023 following year-on-year growth of 8.6%.

Here to advise

Finding a suitable mortgage and the right protection cover can be tough, especially in a rapidly moving property market. We can assess a wide range of mortgages and protection policies and advise on which ones are best suited to your circumstances.

1Halifax, 2021

2Strutt & Parker, 2021

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.