The average property price could still grow by up to 7 per cent in 2022, according to one forecast – as separate research revealed that Merseyside and Lancashire towns have seen the biggest collective price growth since the pandemic began.
High-end estate agent Strutt & Parker has predicted that prices will increase by 7 per cent next year in an ‘best case’ scenario, though it also made a ‘downside’ prediction of 2 per cent growth.
The value of a home hit record highs during the pandemic as buyers searched for more space and benefited from the stamp duty holiday, which enabled them to save up to £15,000 in taxes between July 2020 and June 2021.
Agent Strutt & Parker’s most optimistic forecast suggests 7% house price growth in 2022
UK-wide house price growth reached 10.3 per cent in the year to September 2021, the report said, the highest annual figure since September 2014.
Housing transactions over the same period reached 442,930, the highest recorded since the third quarter of 2007.
The end of the stamp duty holiday and the prospect of an increase in mortgage rates have led many to predict that house price growth will slow down in the coming months, though this has not yet materialised.
In the five years to 2025, Strutts predicted that the typical home would increase in value by between 20 per cent and 35 per cent – a forecast that has remained unchanged since its last quarterly report.
Guy Robinson, head of residential at Strutt & Parker, said: ‘The residential market has made a significant recovery in the last 12 months.
‘This has been fuelled by high levels of demand across the market and attractive mortgage rates, while a rebound in the economy gave buyers and sellers confidence to trade up or down the housing ladder.
‘Following significant house price growth year to date, rising at a rate that had not been seen for seven years, the outlook remains positive for 2022 and beyond.
‘That said, it is still unclear the extent to which the shifts in behaviour and lifestyles witnessed will materialise into permanent shifts in market demand.’
Its optimistic forecast was partly the result of the strong housing market that has emerged in regional towns and countryside locations since the start of the pandemic.
Between January and September 2021, the report said that the number of sales in locations outside of London were up 37.5 per cent year-on-year – though in 2020 the housing market was closed for two months during the first national lockdown.
It said housing transaction volumes surged the most in Scotland, the South West and East of England, and predicted that well-connected country locations would continue to lead the market in 2022.
Kate Eales, head of regional agency at Strutt & Parker, added: ‘Beyond London, we have seen every part of the UK outperform in terms of transactions in 2021, with coastal villages and the Cotswolds emerging as popular hotspots.
‘The £500k to £700k price range continues to move fast and properties in this bracket are the most coveted.
‘We expect this will continue and anticipate properties in attractive country villages with good connections and amenities to show the strongest growth in 2022.
‘Going in to next year, less-traditional locations in the likes of Norfolk and Herefordshire could be the biggest winners as buyers become more confident being further from London.’
Strutts also predicted that properties in prime Central London would grow in value by even more than the average home in 2022.
It also said homes in areas such as Mayfair and Chelsea could grow by between 5 per cent and 10 per cent, despite these areas being badly hit by the pandemic as people moved out of cities and international buyers were not able to come to the UK.
It said homes in these areas had increased in value by 1.2 per cent in the last year, the first time growth had surpassed 1 per cent since 2014 – though they remained 20 per cent down compared to that peak.
Liverpool and the Wirral were among the regions that saw the biggest collective price rises
North West is pandemic winner
Meanwhile, separate research by the estate agent Knight Frank has revealed the areas which saw the total value of homes increase the most during the pandemic.
The top three largest increases over the period were all in North West England: Rossendale in Lancashire saw the biggest rise at 24.2 per cent, while in Merseyside the Wirral and Liverpool both saw growth of 21.6 per cent.
The top of the list by total stock value is still headed up by Westminster, but the value dived nearly £20billion between March 2020 and July 2021.
Cornwall leapfrogged Richmond-Upon-Thames into eighth place, while Leeds replaced Ealing at number ten, as buyers abandoned the capital for locations further afield.
Capital exodus? Ealing dropped out of the highest-value housing stock rankings in 2021 in favour of Leeds, while Cornwall rose up at the expense of Richmond-Upon-Thames
Knight Frank said this was because the area had lots of flats and fewer international buyers were able to travel to the UK.
It was one of only three local authorities in England and Wales that saw the value of its housing stock fall over the period, together with Lambeth (-2.2 per cent) and Wandsworth (-1.1 per cent) in South London.
Knight Frank said that ‘fewer’ parts of the country would be experiencing double-digit house price growth this time next year.
James Cleland, head of Knight Frank’s country business, said that those interested in selling their property might be wise to do so early in 2022.
He said: ‘We are starting to see a notable increase in the number of owners contacting us with a view to listing their property next spring.
‘For shrewd sellers, the best time to put their property on the market is likely to actually be January when there are a large number of buyers around.’
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