Has the UK property market reached its peak?

Across the UK, we’re experiencing the worst cost-of-living crisis we’ve seen for decades. Inflation is rising, consumer confidence is plunging, and yet house prices continue to be driven up, with hundreds of thousands of buyers still paying over the asking price to secure the house they want.

The latest UK house price index released last week (23 March 2022) showed that average house prices increased by 9.6% over the year to January 2022. While this was down from 10.0% in December 2021, the average price of a home in the UK was £274,000 in January, a huge £24,000 higher than this time last year!

How do house prices compare across the UK?

Since the housing market opened back up following the lockdown in summer 2020, average house price growth here in the UK has accelerated more than any of us could ever have predicted.

Over the last year, house prices increased in all four nations of the UK, with properties here in Wales seeing the highest hike, reaching record levels:

• In England, the average house price rose to £292,000 (9.4%)
• In Wales, to £206,000 (13.9%)
• In Scotland, to £183,000 (10.0%)
• In Northern Ireland, to £159,000 (7.9%)

How has the housing market not been affected by recent global events?

Clearly, the housing market is continuing to defy economic conditions. Despite being two years on from the start of the pandemic, the imbalance between supply and demand is still an issue and is forcing up the prices of properties that come on for sale.

Looking ahead, however, I cannot see how house prices here can realistically go up much further. While life seems to be returning to some sort of normality with almost all Covid restrictions being lifted, global events are having a big impact here in the UK and we are now being exposed to new sources of uncertainty which are sure to affect the housing market in the coming months.

The devastating war in Ukraine is affecting consumer confidence as well as trade and global supply chains. Gas and oil prices have surged and inflation – which is already at a 30 year peak – will remain higher for longer, all adding to the squeeze on already stretched household incomes.

What is the outlook for the rest of 2022?

As the year progresses, we are fully expecting all of these factors to bring down the sky-high buyer demand that we have been used to and anticipate that the housing market activity will return to more normal levels later in 2022. This in turn should bring about an easing in house price growth.

Ever since the stamp duty and land transaction tax holidays ended, there has been a lack of stock across the UK property market but now that we’re entering Spring, we’re starting to see more properties coming on for sale again, which will help to redress the balance.

While we’re not expecting to see any big changes overnight, I would be very surprised if house price growth is not back down to more normal levels by the autumn.

Get in touch

If you are looking to buy or sell your property, give one of our friendly, experienced team a call on 01633 235145 or 02922 676819, or get a quick conveyancing quote at www.hardingevans.com/services/residential-property