After a year of soaring prices and fierce competition between buyers, house price growth is likely to slow in the coming months as the market settles down.
The Land Registry says prices rose by nearly 11% in 2021, but experts think we’re unlikely to see such rapid rises as 2022 progresses.
Here, Which? analyses what’s happening to house prices and explains whether now is a good time to get on to the property ladder.
What’s been happening in the property market?
The property market soared in 2021, as buyers rushed to take advantage of the government’s temporary cut to stamp duty.
The stamp duty holiday meant buyers in England and Northern Ireland could save up to £15,000 in tax if they bought a home before the end of June, or up to £2,500 if they bought before the end of of September.
The number of property purchases peaked around these deadlines, but the number of sales each month is now returning closer to pre-pandemic levels. Data from HMRC shows around 107,000 transactions went through in January.
The graph below shows the number of sales recorded across the UK since the start of 2021.
Number of residential sales across the UK
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 December.
The Land Registry says that the average price of a property in the UK rose by 10.8% year-on-year in December to reach £274,712, as shown in the graph below.
Average house prices over time
How do other house price indices compare?
There are several other property price indices. The property portal Rightmove provides the most up-to-date figures, but they’re based on asking prices set by sellers rather than confirmed sales. Nationwide and Halifax also publish their own monthly data, based on mortgage lending.
All three providers are currently reporting year-on-year price growth of between 9% and 13%, as shown in the table below.
| House price index | Month-on-month change | Year-on-year-change |
| Rightmove (February 2022) | 2.3% | 9.5% |
| Nationwide (February 2022) | 1.7% | 12.6% |
| Halifax (January 2022) | 0.3% | 9.7% |
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Is the property market set to slow down?
The figures above suggest house prices are continuing to soar, but there are some signs that things are beginning to slow down.
Rightmove says that the number of days it takes to sell a property is rising. The property portal estimates that homes took an average of 44 days to sell in January, up from 39 days in December.
How long does it take to sell a property?
Buyers struggling to find suitable homes
After the home-moving frenzy of 2021, there’s now a mismatch between supply and demand. A recent survey by the estate agency Savills found that nine-in-10 current house hunters have had their search affected by a lack of available properties.
The estate agency trade body Propertymark reported an average of 29 prospective buyers for every available property in January. It says 78% of properties sold for asking price or above, compared to 62% a year earlier.
What will happen to house prices in the remainder of 2022?
Experts predict that house price growth will slow down as the year progresses.
Savills forecasts overall price rises of 3.5% this year and 3% in 2023.
The property portal Zoopla has similar projections, forecasting a 3% rise this year. Halifax envisages a slower property market, with prices changing by 0%-2%.
Is it possible to get a good mortgage deal?
Mortgage rates fell consistently in 2021, as lenders battled to offer the cheapest deals to buyers with big deposits – but that’s now changing.
Rates have been rising off the back of two increases to the Bank of England base rate, but the good news is that there are plenty of attractive deals still available.
Check out our stories on the best mortgage rates and 90% and 95% mortgage deals for the lowdown on the latest mortgage deals.
Is now a good time to buy your first home?
If you’re thinking of getting onto the property ladder in 2022, there’s good and bad news.
The good news is that low-deposit mortgages are readily available, so you might find it a little easier to get a home loan than before.
The bad news is that it’s unlikely that house prices will become more affordable this year. Experts expect slower growth, but none are forecasting that prices will actually fall.
If you are thinking of taking the plunge, we’re here to help. As a starting point, check out our story on the five things all first-time buyers should consider. And you can explore all our free house-buying and mortgage advice in our mortgages and property section.
