There is growing speculation that the housing market could crash in 2022. High interest rates coupled with the cost of living crisis has seen households squeezed as they try to afford rising energy and fuel costs. The Bank of England has predicted that inflation in the UK will hit 10% by the end of 2022.
Savills is predicting that house prices will drop by 1 per cent in 2023 with several slow years of growth to follow.
How have house prices changed?
House prices have risen considerably in the last 12 months, with the pandemic and stamp duty holiday bringing about a more volatile market. The Land Registry’s UK House Price Index is the most reliable barometer of what’s happening to house prices, as it’s based on actual property sales rather than asking prices. It works on a two-month lag, so the most recent figures are for April. The Land Registry says that the average price of a property in the UK rose by 12.8% year-on-year in May to reach £283,496, as shown in the graph below.