According to the experts at Zoopla, house price growth is expected to slow to 3% next year.
This year we have seen unprecedented conditions in the housing market – and this has been the case ever since the property market re-opened after the pandemic at the end of June 2020.
Once Covid19 hit, the property market effectively closed for 3 months. What no one predicted was that once the market opened again, buyer priorities would have shifted so much – combined with low mortgage rates and a stamp duty holiday – that supply would not meet the demand and prices would be pushed up at an incredible rate. As a result, this is set to be a record year with 1.5m transactions taking place making it the busiest year since 2007. What’s more, 22% of people currently want to move home – in a normal market this is just 5%. At the end of September this year, house price growth hit 6.6%.
Demand from buyers has been running at 30% above the five-year average since the summer months and will remain high for the rest of this year and into next year. The market in 2020 was dominated by those at the upper end of the market looking to upgrade their homes, but as mortgage availability improved more first-time-buyers entered the market.
An incredible £473 billion worth of homes will be sold this year, this is £95 billion higher than the number of offers accepted in 2020.
However, the level of activity is expected to drop in 2022 as the market faces some challenges.
Despite today’s budget, the cost of living is set to rise as fuel prices are at record highs, and mortgage rates are also predicted to go up, and this will affect affordability. There will be some positive factors though – the pandemic has resulted in a demand for more space and as more people continue to work from home, buyers have more choice when it comes to location. The high levels of equity homeowners have built up during the past 18 months and the shortage of properties for sale could support house price growth into next year. House price growth is expected to end 2022 at 3% and transaction levels are expected to fall by 20% to 1.2 million.
If you’re considering moving home, it’s still a good time to list your home as demand from buyers is continuing to outstrip supply and we are seeing fierce competition especially for family homes in the area.