Making predictions is never easy when discussing the ever-uncertain Housing Market. In May 2020, the Bank of England warned that house prices could fall by as much as 16% as a result of the coronavirus pandemic. Following this news, the housing market did slow down for a few weeks during the beginning of the pandemic however it didn’t take long for the market to spring back to life and thrive once again. The key to this success boils down to the stamp duty holiday which gave home buyer’s huge savings on their purchases.
The impact of the Stamp Duty Holiday
Many thought that come the end of the stamp duty holiday the property market would dip, if not crash. 5 months on and the market is still very much thriving. The demand for residential property is still growing and with that, house prices continue to soar. January 2022 saw the fastest growth rate in 17 years!
Although good for the economy, the drastic rise in house prices does make it harder for many people, especially first-time buyers who wish to get onto the property ladder. Affordability is the main issue as house prices are increasing faster than the average wage. Nationwide’s chief economist has stated that “a 10% deposit on a typical first-time buyer appropriate home is now equivalent to 56% of total gross annual earnings” which is a record high.
That being said mortgage approvals are above pre-pandemic levels even without the succour of the stamp duty holiday in 2021 which meant that many purchasing homes avoided paying tax. Whether this is to be consistent throughout the year of 2022, we are yet to see. There remains uncertainty around the mortgage products that will be available for those looking to purchase due to the likelihood of further increases in interest rates.
What we think?
With mortgage products likely to be harder to source with a higher long-term cost and the increasing pressure on household income due to rising utility costs, it is likely that growth in the housing market will start to slow down throughout 2022.
Only time will tell which way the housing market will really go.
Should you be looking to sell or purchase a property, please do not hesitate to contact Ashleigh Skeet, a Conveyancing Executive who is based at our Thetford and Norwich offices on 01842 754151 or firstname.lastname@example.org