U.K. to See Feverish Home Price Growth Cool to a Modest 3% Rise in 2021
U.K. home price growth will slow and normalize in 2022 following a banner year for residential real estate that buyers have fueled since the Covid-19 pandemic, according to a forecast Tuesday from Zoopla.
“The impact of the pandemic has further to run,” Zoopla’s executive director Richard Donnell said in the report. “The current momentum in the market will largely offset growing headwinds over 2022 with average U.K. house prices increasing by 3% and 1.2 million sales.”
Sales are expected to exceed £473 billion (US$651.1 million) in the U.K. this year, an increase of £95 billion compared to 2020, the property portal found. This year is set to be the strongest in terms of sales since 2007, before the global financial crisis.
Prices in the U.K. were up 6.6% year over year in September, the data showed. Broken down by region, Wales saw the highest jump in prices last month (10.4%), followed by the North West and North Ireland, which had gains of 8.8% and 8.3%, respectively. Prices in London rose 2.3% in the same time period.
The stamp duty holiday—which saved buyers up to £500,000 in transfer taxes through July and was then tapered down to £250,000, finally expiring at the end of September—helped bolster the market, but the desire for more space and amenities will continue in 2022.
So-called headwinds next year include rising interest rates, limited inventory and a higher cost of living, according to the report. Still, 22% of U.K. households are looking to move in the next year and a half “as a direct result of the pandemic,” according to a user survey conducted by Zoopla.
The strongest price growth in 2022 is predicted to be in regional markets, the report found. The North West and East Midlands are both expected to register a 4% increase next year, while London prices could rise 2%.