According to data published by the Office of National Statistics (ONS) in March 2022, the average house prices in the UK have increased by 9.6%. This was on average £274,000 which is £24,000 higher than this time last year. According to Zoopla’s data, the typical UK home gained £16,000 in value in 2021, taking it up to nearly a quarter of a million pounds.
When separating the UK, the increase over the year in equates to England £292,000 (9.4%), Wales £206,000 (13.9%), Scotland £183,000 (10.8%) and Northern Ireland £159,000 (7.9%). Research produced by Savills concluded that this annual increase means that, effectively, ‘houses earned more than people’ last year. This is based on the 2021 Annual Survey of Hours and Earnings, that the average UK worker earned £25,971.
House prices soared during the covid pandemic due to various reasons including stamp duty and the new mortgage guarantee. On 8th July 2020, changes to the tax paid on property purchases were announced. With the knowledge of less overall costs this could have led to sellers requesting higher prices on their properties. In terms of Stamp Duty Holiday, on the 3rd of March 2021, it was extended until 30th June 2021. After which the threshold decreased to £250,000 until 30 September 2021. Yet, tax breaks were originally due to conclude at the end of March 2021.
Buyers therefore rushed their property buying to ensure their purchase was within the deadlines. Thus potentially, affecting the prices within the market. Furthermore, there seemed to be a “race for space” concept. Whereby buyers, surged to invest in larger properties with the new working from home guidelines. Whilst house prices could still stabilise in 2022, demand still remains high.
Will House Prices Drop In 2022?
Rightmove, have reported the number of prospective buyers enquiring about homes was up 15% on this time last year. However, the impact of inflation and the rise in interest rates could still prove to influence the market.
Ross Counsell, chartered surveyor and director at GoodMove, comments “I strongly believe that house prices will finally begin to fall this year. We know the cost of living is continually increasing, with energy prices especially going up in the next few months. With less buyer demand comes lower house prices, and with this in mind, we expect many Brits will have to tighten their belts financially and may not be looking to move home because they may not be able to afford it.”
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