House prices 2022: The THREE reasons costs could soar next year - expert analysis
THE PROPERTY MARKET has seen a remarkable year so far in 2021 as it bounced back from the first coronavirus lockdown. But as prices continue to soar, will there be a drop in prices next year for hopeful buyers?
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Since the first lockdown, the property market has boomed with a number of factors causing hundreds of thousands across the UK to reconsider their living situation in light of what is likely to be long-lasting changes to the way we live and work. On top of this, the housing sector is facing an acute shortage of homes for sale after record transactions took place toward the end of the stamp duty holiday.
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The stamp duty holiday - which was worth up to £15,000 on the first £500,000 of purchase until the end of June, has now been tapered down to £250,000 until the end of September in England and Northern Ireland — sparked a flurry of activity on the market.
In June, a record number of homes changes hands, with 213,120 sales registered with HMRC.
Property portal Zoopla reported that Britain was in the midst of its “greatest stock shortage since 2015” as the number of properties for sale in June dropped by 26.4 percent compared with the 2020 average.
But as house prices have surged at the fastest pace since 2004 - a good thing for sellers - buyers naturally look for lower prices. So is the trend likely to continue into next year?
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What will the housing market look like in 2022?
Property experts are not predicting any drastic changes to the market in 2022, with most predicting prices will continue to rise or plateau.
However, one notable issue is the lack of available houses on the market, with the high volume of sales eating significantly into available stock.
The shortage is the most pronounced among family homes and those priced up to £350,000.
Gráinne Gilmore, head of research at Zoopla, said: “The post-pandemic reassessment of where to live has further to run, especially as workers receive confirmation about flexible working.
“This means higher levels of demand will still be evident and potential vendors with family houses to sell could be in pole position.
“However, the lack of supply, especially for family houses, means the market will start to naturally slow during the rest of this year and into next year as buyers hold on for more stock to become available before making a move.”
But the shape of the market depends on more than just the homes available, with the wider economic recovery being a key factor in determining house prices in 2022.
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John Penberthy-Smith, Chief Commercial Officer at Saffron Building Society, told Express.co.uk: “I predict the 2022 housing market and house prices will be full of surprises!
“Partly because it’s following on from nearly two years of extraordinary swings in the housing market, which went from nearly being shut down in the first half of 2020 to rampant growth in 2021 - with home prices soaring over 10 percent year on year.
“So pricing in 2022 will be determined by three things; firstly how the pandemic develops and how it shapes the strength of the UK economy, the pulling forward of house purchases in 2021 will mean a shortage of homes to buy which will support keeping prices up.
“Thirdly, whether the trend of people working remotely and moving out of cities - looking for more space - will grow demand and prices in the regions beyond London."
Mr Penberthy-Smith said he believed house prices could stay high in the coming months.
“Taken together, there is a good argument for prices to remain high, although a weakening economy could change that combined with a reduction in the race for space as people return back to offices.
“In the uncertainty, there will still be good value in the market and it’s key to remember that fundamentals when buying a house - location, aspect and how resaleable it will be in the future - as those things tend to endure whatever the market situation.”
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Changes could also be more pronounced in typically cheaper areas to buy such as the northwest of England, with region-specific expert Nicky Gordon predicting a continued rise.
Mr Gordon, managing director of Genesis Homes and Russell Armer Homes in Cumbria, told Express.co.uk: “A reason for the rise in house prices in the North West and other parts of the North is that these regions were already some of the most affordable areas to live by comparison to other parts of the UK, particularly the South East and West, and this has seen the immediate demand eat up what was available.
"The impact of Covid-19 has led to a lack of second-hand properties coming on the market as many people are now choosing not to sell, whilst new build housing was significantly disrupted by the pandemic in terms of its labour and supply chains.
"The lack of supply, coupled with the extra demand, in a price point that was already lower by comparison than elsewhere, will dictate a continuation of house price rises in these parts."
