Will UK house prices hit record highs in the coming months?

The average UK house price hit an all-time high eight times in 2021 itself. Then, in January 2022, the average UK house price once again hit an all-time high. From November 2020 to November 2021, the average house price increased by 10% in the UK. Currently, the UK property market is in overdrive. With an imbalance between supply and demand, low interest rates and a rising rate of inflation, property prices in the UK are on the rise. This brings us to the question on everyone’s mind, will property prices continue to rise in 2022?

The average UK house price hit an all-time high in March 2022, with average prices at £278,123 according to the latest House Price Index. Currently, house prices have increased by 10.8% from February 2021 to February 2022, and experts believe that prices will continue to rise. Using this data, we can safely conclude that this is the highest annual rate of growth in UK house prices over the past 15 years. If you are thinking of selling a property, you might want to wait as experts predict that property prices could continue to rise in 2022. In line with the trend of the past 8 months, where property prices have reached a record high every month, it is not impossible to see a further rise in house prices in the United Kingdom.

How much has the average house price increased in the UK over the past year?

In Wales, the annual property price increased by 13.8%, putting Wales at the top of the list of the best performing areas in the UK. In Northern Ireland house prices increased by 13.1% while in the South West of England the average house price rose by 13.6%. Surprisingly, London was actually the worst performing area in the UK, with house prices rising just 5.4%. This minimal growth is directly related to the shift in buyer preference as more and more people have started to move out of town and into the suburbs to improve their homes and lifestyle. However, house prices remained the highest in London, with prices reaching £521,146. On the other hand, house prices in the North East of England continued to fall, with the average house price actually falling by £147,214.

But why are real estate prices rising so sharply?

On the one hand, the Covid-19 pandemic has certainly played its part in impacting real estate prices. Initially, during the first confinement due to the Covid-19 pandemic, there was a total ban on real estate activities. When the real estate market opens, there will be a definitive collapse. In order to stimulate the UK property market and economy, the UK government announced the Stamp Duty Holiday, which was a temporary suspension of the stamp duty tax. While the stamp duty holiday ended in October 2021, there are still quite a number of buyers who have taken advantage of this tax relief. Real estate prices were expected to fall after the end of the stamp duty holiday. However, the average UK house price hit a record high in December 2021, January 2022 and again in March 2022.

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What factors will impact the average UK house price in 2022?

The rate of inflation will certainly have an impact on the price of property in the UK. The inflation rate is on the rise, with an increase of 5.5% in January 2022. The Bank of England has predicted that the inflation rate could exceed 7 or 8% in 2022! In order to combat rising inflation, the Bank of England raised the interest rate. This means that banks and lenders will further increase the interest rate on loans and mortgages, thereby increasing the total value. Additionally, due to the war between Ukraine and Russia, there has been a massive spike in fuel, gas and energy prices, all of which have a direct impact on the cost of living. As gas and energy prices continue to rise due to the war, the cost of living will continue to rise, thus increasing the rate of inflation. Essentially, this cycle of rising prices and rising inflation is what will lead to a further increase in the average UK house price.

What are the experts saying?

Some experts believe that it is difficult for real estate prices to continue to grow despite the difficult economic conditions. They believe rising inflation, rising interest rates and the rising cost of gas, energy and fuel will increase the cost of living, putting pressure on ordinary households. In such an economic climate, we will see a significant drop in real estate demand. On the other hand, some experts believe that the space race in the UK will continue, thus impacting UK property prices. Lloyds Banking Group estimates the average UK house price will rise by just 1% in 2022.

Cluttons experts suggest that London property prices could actually fall by 10%, while Foxtons experts predict 1-3% growth in London property prices. The Hamptons data assumes the average UK property price will rise 3.5% to 5% from 2022 to 2024. So while most experts agree this year will be relatively slower, there are sort of a common consensus that house prices will continue to rise in the UK in 2022. Essentially the market is expected to grow, but rising inflation coupled with high interest rate and utility bills High utilities will slow the UK property market by 2023.

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