Will house prices drop in 2022?

HOUSE prices remain high across the UK with the average property price standing at £295.903 – but could they fall?

According to the ONS, UK average house prices soared by 13.6% in the year to August.

Property prices surged last year due to pent-up demand following coronavirus, a lack of homes on the market driving demand up and the end to the stamp duty holiday.

Latest data from the Land Registry shows that the average house price in August stood at a record £296,000.

And on September 23, the government announced a permanent cut to stamp duty in a bid to boost economic growth.

The announcement means no stamp duty is paid on the first £250,000 of any property, up from £125,000 previously.

For first-time buyers, the threshold is now £425,000, up from £300,000.

The maximum value of a property on which first-time buyers’ relief can be claimed will also rise from £500,000 to £625,000.

But property prices have come under pressure after mortgage rates shot up following the disastrous mini-Budget and amid rising inflation which sat at 10.1% in September.

Just today, the Bank of England (BoE) hiked its base rate to 3% today, piling pressure on mortgage owners.

It increased its rate from 2.25% to 3% – the biggest single rise since 1989, in a bid to slow soaring inflation and encourage people to save.

But what does it mean for house prices for the rest of the year?

Are house prices likely to go down in 2022?

House prices went up, not down, following the last stamp duty holiday, in July 2020.

Then Chancellor Rishi Sunak announced the freeze in a bid to stimulate the housing market.

But rising interest rates, which have caused mortgage rates to skyrocket will mean house prices are likely to drop over the next couple of months.

Following today’s interest rate hike, the Bank of England said it expected recent falls in house prices to continue due to higher mortgage rates.

Meanwhile, Nick Morrey, from mortgage company Coreco, said house prices would fall next year but that nothing would happen straight away.

He added: “This is what we expected and the markets were expecting.”;

House prices also tend to fall in November and December every year as demand falls around this time.

In its latest economic outlook, Lloyds Banking Group has said it expects house prices to fall by around 8% in 2023.

The banking group owns Lloyds, Halifax and Bank of Scotland and is the UK’s biggest mortgage lender.

In an update to its economic forecasts, the bank said that it believes the Bank of England (BoE) base rate will reach 4% by the end of the year.

Of course, it’s worth noting that predictions are just that, and that no one can say for sure.

But if inflation improved and interest rates stabilise, Lloyds said house prices could fall just under 3%.

The predictions come after Halifax said the average house price dipped in September as mortgage interest rates soared.

The annual rate of house price growth also slowed to 9.9% in September from 11.4% in August – returning to single digits for the first time since January.

A typical UK property now costs £293,835, according to Halifax’s index.

But the most recent data from Rightmove said house prices hit a record high, despite recent turmoil in the mortgage market.

The average asking price on a property hit £371,158 in October – an increase of £3,398 on September and a 7.8% increase on the same time last year.

The property website said shortages of property for sale continue to underpin prices.

And the impact of the mini Budget, which has pushed up mortgage rates has yet to be reflected in the property market.