What’s next in store for house prices in 2021 and 2022?

a residential street in Edinburgh2021 has been a record-breaking year for house prices.

In the year up to September when data was last available, the UK House Price Index recorded average prices having risen 11.8% across the UK.

In Scotland, these figures were even more impressive, having climbed 12.3% up to September, after hitting a record-high average price of more than £181,000 in August.

However, some experts are now suggesting that there could be trouble ahead for the housing market.

As ever, expert predictions are incredibly fickle; somehow, analysts draw different conclusions despite poring over the same data.

That’s why it’s important to take such forecasts with a hefty serving of salt.

Even so, find out what experts are saying about the prospects for house prices in 2021 and 2022.

Inflation, taxes, Covid, and Brexit

According to FTAdviser, there are a multitude of factors that analysts and brokers believe could cause a slowdown in the housing market as the end of 2021 fast approaches.

Most commonly, these include:

  • Increased inflation
  • The end of the Stamp Duty holiday
  • An increase in taxes and the cost of living
  • Pent-up demand from Covid finally running out
  • The long-term impacts of Brexit.

In combination with an end of year slowdown that has often happened historically over the Christmas period, the market may well see much of its summer momentum finally fade away by the end of the year.

Zoopla forecasts a mixed year

Meanwhile, Zoopla is far less concrete about the market’s prospects over the coming months, especially in the long term.

According to the property search site’s forecasts, Scottish homes are actually predicted to rise a further 2.5% by December 2022.

However, similarly to other experts, Zoopla’s analysts have also suggested that the rising costs of living alongside an increase in taxes could create an issue for affordability among buyers.

Additionally, the impact of inflation could still drive mortgage rates higher than the low levels seen over the past few months, making new deals less appealing to first-time buyers.

Zoopla estimates that 1.5 million homes changed hands throughout 2021, making it the busiest year for homebuying since 2007. But, for 2022, they’re predicting a 20% drop off to 1.2 million transactions.

It’s worth bearing in mind that this is still comfortably in line with long-running averages, and is in fact still relatively high when looking at transaction data from the past 10 years.

Hamptons takes a positive outlook

Of course, as with any data like this, there’s always a cup-half-full perspective which, according to the Guardian, is the opinion of estate agents Hamptons.

Instead of seeing the slowdown in growth as a sign of a declining market, Hamptons see this summer’s record activity as “peak house price growth”.

So, while acknowledging that growth will likely slow, Hamptons sees this year more as the outlier, with an inevitable return to normality.

Indeed, over the long term, the estate agents is still optimistic, forecasting price rises of 3.5% a year between 2022 and 2024.

From this point of view, a winter slowdown is nothing more than par for the course, as the market stabilises and returns to its steady, pre-pandemic movements.

Work with a professional

If you’d like to know whether now is the right time to buy a property for you, please get in touch with us at Edinburgh Mortgage Advice.

Email [email protected] or call 0131 339 2281 to speak to us.

Please note

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Buy-to-let (pure) and commercial mortgages are not regulated by the FCA.

Think carefully before securing other debts against your home.



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