Average UK house prices will rise by 4% next year, with London home prices and rents expected to recover, according to forecasts from Chestertons.
The estate agent adds that house prices will lift by 3% in 2023, 2% in 2024, 2% in 2025 and 3% in 2026.
Chestertons chief executive Guy Gittins says: “There are a number of factors that should continue to push property prices up in 2022.
“The economy is recovering better than expected, employment and wages are booming and first-time buyers will continue to benefit from the government’s Help to Buy scheme until April 2023.
“Most importantly, the number of people looking to move heavily outweighs the number of properties available on the market. However, price increases are likely to be tempered by the rising cost of living and the expected increases in taxes and interest rates.
“The re-introduction of Covid-19-related restrictions also remains a possibility. Assuming national lockdowns are behind us, we think average UK house prices will grow by 4% in 2022, before settling at 2% to 3% per annum over the following four years.”
The firm says prime central London property price will pick up next year after sluggish growth in 2021.
It forecast that prime central London house prices will lift by 7% in 2022, 4% in 2023, 3% in 2024, 2% in 2025 and 3% in 2026.
Chestertons’ Gittins adds: “London property prices grew much less than the rest of the UK in 2021 and prices in some of London’s higher value locations are still lower than their pre-lockdown level.
“This, combined with a general shortage of housing and the fact that more people are returning to work in London, will push property prices in London’s higher value locations up by 5% in 2022, assuming no further prolonged travel restrictions.
“Prime central London prices will see even stronger growth of 7% next year as international buyers return in greater numbers, tempered somewhat by the additional 2% stamp duty surcharge that non-UK residents are now charged.
“Prices across Greater London are likely to be flat in 2022 due to affordability issues.”
The estate agent adds that rents in the capital will also lift, albeit at a slower pace than this year, due to the continued return of tenants and a shortage of rental stock.
It forecast that that rents in Greater London will lift by 5% in 2022, 3% in 2023, 3% in 2024, 2% in 2025 and 2% in 2026.
Chestertons head of lettings Richard Davies says: “With tenants continuing to return to London in greater numbers and a continued shortage of rental properties, we expect rents will continue to rise in 2022, albeit at a slower pace.
“We forecast that rents across the higher value London locations will grow by 8% in 2022, and rents in prime central London by 10%.
“Rental growth across Greater London will be lower at around 5%.
“This is good news for landlords who are starting to see yields creep up above 4% in some areas, a fact that may encourage a return of buy-to-let investment, which has been largely absent since the introduction of the 3% stamp duty surcharge for second homes in 2016.”
