Halifax 2022 forecast: UK house price growth boom to cool and be around 1%

·2-min read
House prices have increased during the pandemic  (PA Wire)
House prices have increased during the pandemic (PA Wire)

UK house price growth next year may be in the range of flat to 2%, and not match bumper rises seen during the pandemic, mortgage lender Halifax has forecast.

While Halifax predicts growth of around 1%, its new outlook report cautioned “forecast uncertainty remains very high”.

The market has been boosted during the coronavirus crisis by many people during lockdowns reassessing how much space they want and where they want to live, and attractive mortgage deals. There was also a stamp duty holiday which finished at the end of September

Annual price growth is 8.2%, with the average UK house price now £272,992 compared to £252,235 a year ago, a rise of £20,757.

Russell Galley, managing director of Halifax, said: “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 slow considerably.”

He pointed out however that interest rates will remain low by historic standards and property prices will continue to be supported by a supply and demand imbalance.

Galley added: “We expect that house prices will maintain their current strong levels but that growth will be broadly flat during 2022... 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.”

Earlier this week property website Rightmove said the UK housing market is set to be closer to “normal” in 2022, following a “hectic” last 18 months.

Any return to more normal market conditions could signal less work for part of 2022 for firms that have seen bumper demand for their services during the pandemic.

Jeremy Leaf, north London estate agent, said: “The sheer volume of activity across the housing market this year has been overwhelming, not just for lenders but solicitors, surveyors, removals firms and other professionals involved in house moves. Next year is likely to be much less frenzied.”

Simon Gammon, managing partner at Knight Frank Finance, said: “After two boom years and a rate hike, property market activity will fall back over the course of 2022. Lenders set themselves ambitious targets at the beginning of each year so they will be seeking to squeeze in as many deals as possible in the first quarter before activity eases.”

He expects to see a jump in remortgaging activity following the Bank of England’s decision yesterday to increase interest rates to 0.25% from 0.1%.

Gammon said: “It’s going to be a very busy first quarter and the banks will want to capitalise while they still can.”

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