According to Zoopla’s most recent house price index, 2022 will see slower property price growth due to ‘headwinds’ like higher mortgage rates, higher living costs, and increased taxes.

According to the online property portal, house prices will grow at 3% by December 2022 as opposed to a rate of over 6 percent now. 

It was also noted that sellers’ unrealistic expectations about the value of their home could dampen market activity. 

It said that mortgage rates will likely rise’modestly’ in 2022. This would bring the year to 3%. However, it claimed that a rise in mortgage rates would have a greater impact on sales volumes than price increases.

Slowing down: The pace of property price growth will slow in 2022, according to Zoopla

Slowing down: Zoopla predicts that property prices will slow in 2022.

Zoopla claims that existing borrowers could be more protected against higher mortgage rates than they were in the past. 

Even if they do rise, the portal stated that there would be fierce competition among lenders.

More than 80 percent of mortgages are at fixed rates, with many being for five years. 

Stress testing has already shown that they can afford mortgage rates at 7 percent, which is higher than the current market. 

Property sales are expected to surpass 2007’s 1.5millon mark this year. 

Zoopla predicted that £473billion worth of newly agreed sales will have taken place by the end of 2021, which is £95billion more than last year.

It said that although there was no sign of a cliff edge in buyers’ demand, the market activity was expected to slow down in the coming months.

Zoopla predicts that there will be approximately 1.2 million property sales in 2022. This is 20 percent less than the 1.5million this year.  The stamp duty holiday, cheap mortgage deals and a surge in buyer demand for more space have all helped to buoy the market this year. 

Zoopla reported that although there is still a shortage in homes available for sale, the demand for homes is 30% higher than the average five-years. It expects that demand will continue to rise’strongly’ through next year. 

Affordability: House price to earnings ratios for a single earner across the country

Affordability: Housing price to earnings ratios for single earners across the country

According to the property portal, “The scarcity of houses is expected to continue well into 2022, supporting headline housing price inflation.”

Despite a “marked regional disparity” of 2.3 to 4% in London and 10.4 percent in Wales, house prices are currently rising at 6.6%. 

Zoopla reported that above-average house price growth is expected in the most affordable market, where current growth rates are highest. 

According to the data, the North West of England will experience the highest house price growth (at 4%) and East Midlands (2%) in 2022. London will experience the lowest at 2%.

Richard Donnell, executive director at Zoopla, said: ‘2021 is set to be a record year for the housing market with the most moves by homeowners since 2007 and nearly £500billion of home sales. 

“The pandemic’s impact on the housing market will continue to run, but at a slower pace. 

“We believe the market will continue to grow despite some headwinds such as higher living costs and higher mortgage rates. 

“The latest data shows that there is a turning point with regards to the rate of house prices growth. We expect the pace to slow, with average house prices in the UK rising by 3 percent by 2022.

After the first lockdown in 2013, it was usually wealthy homeowners who chose to move from high-value properties. Zoopla says that this year, however, there were fewer homeowners who chose to move. Mortgage availability improved and more first-time buyers returned to the marketplace.

Zoopla reported that the mix of movers is now back to normal. This has led to a slower growth in the home’s value, which is indicative of a slowdown in future price growth.

While affordability levels have improved by 10% in London since 2016, affordability remains well above the long-term average. Zoopla said that this will limit future price rises in London’s highest-value areas and in southern England in 2022, and beyond.

Official data from the Office for National Statistics last week revealed that property prices have increased by 10.6 per cent to an average of £264,000, which is £25,000 more than this time last year. 

Mortgage watch: Mortgage rates have fallen but regulation has added protections

Mortgage watch: While mortgage rates are falling, regulation has added protections

Problem area: Demand continues to outstrip supply in the UK property market

Problem: The UK property market continues to see a high level of demand that exceeds supply 

Best mortgages

Affiliate links may appear in some of the links. We may earn a small commission if you click on them. This helps us to fund This Is Money and keeps it free of charge. We don’t write articles to promote products. We don’t allow any commercial relationship to influence our editorial independence.