House prices will continue to rise in 2022, says Property Shop

House prices in the UK rose by more than 10 per cent in 2021, which was the fastest growth rate recorded since 2004.  

The price of an average UK home hit a record high of £254,822 in December, up nearly £24,000 over the year. The average house price in Lancashire hit £194,260.

House prices are now 16 per cent higher than before the pandemic struck in early 2020, just as we adapted to the first in a series of lockdowns. One in 16 privately owned homes in the UK were on course to change hands by the end of December 2021.

This can be attributed to a number of reasons – the first being a sudden and urgent need for more space, as people adapted to working from home, and wanted outdoor space of their own. Alongside that was a decrease in transactions in flats, and an increase in other housing, partly because of desiring outdoor space and more room, and partly as people left cities as they no longer needed a short commute to work in the city centre, due to the work from home rule, which has continued as a trend even when not mandated.

Other factors included the temporary relief to the stamp duty land tax which came to an end in September 2021, and saving ability during lockdowns which gave more flexibility on deposits. Householders were also able to improve their houses due to having more disposable income – finishing off the bathroom, building a garden room, or just general redecorating which enabled them to request a good price from the market.

One factor that may help to keep house prices buoyant for 2022 is the news that the Bank of England is considering scrapping the affordability rule, that tests whether a mortgage applicant would still be able to afford payments if the interest rate was 3 per cent higher. The current Bank of England base rate is just 0.25 per cent. Six per cent of mortgage borrowers – about 35,000 people – would be accepted for a new mortgage if this rule was scrapped. A further 1 per cent of renters – about 50,000 people – are not able to meet the affordability rule. Recommendations of not lending more than 4.5 x salaries would stay in place, ensuring people can afford the amount they’re borrowing.

House prices will also stay buoyant due to demand, as people still want more space and many are now working from home regularly or permanently. First time buyers are also in a good position in the market, as their offers are valued over others due to a lack of chain and being ready to move. Buy to lets are also remaining popular as rates on savings are low currently, and the average yield on a rental property is around 8 per cent.

Steven Chippendale, managing director of Property Shop, commented: “We’re seeing house prices continue to rise in East Lancashire, and no slow down in demand – we have multiple viewing requests for every single property. We have to advise customers on taking the best offer for their property rather than just the highest, ensuring the highest chance of success of all sales in the chain going through. 

The end of furlough payments may also stimulate demand, as people who wanted to move but were on furlough return to full salary and are now released into the market.

2022 will prove to be another interesting year for the property market, and we do forecast property prices will continue to rise – but there will probably be a slowing down, with a total rise of 5 per cent over the year.”

Property Shop are the local property experts, with branches in Burnley and Accrington. Independent and family owned with a team of 30, they run a sales, lettings and commercial agency giving them breadth and depth in the local property market. You can see more on propertyshopltd.com and book in for a valuation.

Sources: Zoopla, Nationwide, ONS, Bank of England