House prices in Yorkshire are forecast to increase by 3% in 2022, indicating a UK wide slow down after a ferocious boom period that began when estate agents reopened in May 2020 after the first lockdown.
Zoopla predicts that the UK average rise in next byear will also be 3% with the North West and East Midlands expected to see the greatest rise with 4%, while the weakest property market looks set to be London at 2%. The property portal's data points to a clear turning point for house price growth, which it believes has now peaked after a home buying frenzy that has this year’s housing market on track to record the highest level of sales (1.5m) since 2007.
Experts from the property portal add that there is no sign of a cliff edge in demand for homes. Their latest prediction points to a return to steady growth rather than rapid rises in values, which will come as a relief to first-time buyers.
This month’s Zoopla UK house price index shows year-on-year house price growth at 6.6% between September 2020 and September 2021 with Yorkshire recording a 7.6% increase. The North West saw the highest rise in England with 8.8% while Wales topped the UK table with 10.4%. London trailed behind with 2.3%. The Cities Index for the same period saw Liverpool top the table with 7.6% growth, followed by Manchester with 8.7% and Sheffield in third place with 7.8%. Leeds was eighth with 6.5%.
Zoopla say that the primary market momentum catalysts for 2022 stem from the ongoing reevaluation of housing needs, increased equity, and moves in parts of the labour force to more hybrid working. Taken together, these factors will continue to bring buyers and sellers into the market. The scarcity of homes is also set to continue well into 2022, supporting headline house price inflation.
Headwinds for the market will come from increases in the cost of living, higher levels of inflation and tax increases in 2023. The consensus amongst economists is that higher mortgage rates look to be a certainty in 2022 and could end next year at 3%, which in turn will directly impact household buying power. However, the predominant market challenges will stem from unrealistic expectations from sellers around sales prices, and a lack of homes for sale deterring new entrants to the market.
Zoopla’s Richard Donnell says: “2021 is set to be a record year for the housing market with the most moves by homeowners since 2007 and nearly £500bn of home sales. The impact of the pandemic on the housing market has further to run but at a less frenetic pace. We expect the momentum in the market to outweigh some emerging headwinds from higher living costs and the risk of higher mortgage rates. The latest data shows a turning point in the rate of house price growth, which we expect to slow quickly with average UK house prices up 3% by the end of 2022.”