Friday 29 October 2021
The UK property market has proven to be resilient hitting record highs, with the number of sales set to exceed 2007 (1.5 million) and over £473 billion of new sales agreed - £95 billion higher than 2020.
Zoopla also reports further room for above average price growth in the most affordable housing markets where the current rate of growth is highest. UK house price growth is to slow to +3% over 2022 with 1.2m sales. House price growth will be greatest in the Northwest and East Midlands (+4%) and lowest in London (+2%).
Richard Donnell, Executive Director at Zoopla, advised, “the impact of the pandemic has further to run. The current momentum in the market will largely offset growing headwinds over 20222 with average UK house prices increasing by 3% and 1.2m sales.”
In comparison to last year’s forecast from Zoopla, the housing market has significantly outperformed. This is a result of the ongoing national re-evaluation of housing, low mortgage rates and the additional boost from the extended stamp duty holiday.
However, the current market conditions are not just a result of the stamp duty holiday. There are other influences on the property market, which is demonstrated from no sign of any cliff-edge demand. The demand continues to run 25-30% above the 5-year average since the summer.
Additionally, Zoopla reports that demand will continue to grow. Ending the year more strongly than 2020 and expected to carry on into 2022.
Currently, the UK house price growth is at 6.6% with all countries and regions of the UK registering growth rates higher than the predicted 5-year annual average. See the chart below to see the breakdown:
Nationally Zoopla expect average house prices to increase by 3%, down from an annual growth rate of 6% at the end of 2021. The upward momentum in prices over 2020 and 2021 has been created by the initial impact of the pandemic and artificial stamp duty holiday deadlines over 2021 - factors that will not repeat themselves in 2022. Together with our expectation of a modest increase in mortgage rates, we believe the net result will be a moderation in the rate of growth to more sustainable levels.
At a region and country level, we expect house prices to continue to increase at an above average rate in regional housing markets over 2022, albeit at a slower pace than currently. The fastest growing markets are expected to be the Northwest (4%) and Wales (4%) with below average growth of 2% in London where affordability factors will limit growth in the near term.
The September 2021 house price index from Zoopla shows a positive annual increase especially in Northern Powerhouse cities such as Liverpool, Manchester, and Sheffield. See the regional figures below: