Getting your foot on the property ladder in 2022 has been harder than normal for most people. The average property price has increased by as much as 11% over the year. With demand high but the prices higher, it has been a tricky time for all involved in the process of buying or selling a house. Where in the past the average sale time for a property could be around 6 months, now it has begun to creep up as people cannot afford to buy. This leaves many properties sitting on the market for much longer than normal causing concern for sellers looking to capitalise on the higher prices.
Some experts within the industry believe that we could be at the end of this struggle though. The increased cost of living and the constant rising interest rates could well lead to house prices starting to level out and potentially dropping significantly.
Why are house prices high this year?
Nationwide studied the data surrounding house prices and found that in the past 10 years alone, the average UK house price has increased by over 60%. And since the turn of the century the cost of your average home in the UK has trebled.
Where many thought the rises were driven by a simple case of supply and demand, the Bank of England say that the previous low interest rates were a factor. Now with them rising, we have reached a point where, just possibly, the peak has already been hit.
House prices are, in effect, always linked to how the rest of the economy is performing. If wages aren’t increasing yet bills are, the availability of funds to put towards buying a property are more limited.
Another potential aspect that led to the increased prices is the stamp duty holiday that was implemented during the pandemic. It bought a new intense demand for housing that saw prices rise fast. Now that the holiday on stamp duty is over, it was thought that prices would gradually drop back to more achievable levels. With demand remaining high, prices have matched the demand but not yet the supply.
Average UK house prices
As we edged out of Covid, or at least remained in its lesser throws, house prices in the UK began to rise. As we mentioned in the previous paragraph, the stamp duty holiday saw a stimulation of the housing market. Its end was meant to slow down the demand for house buying but that slow didn’t come. House prices in the UK have reached record highs in 2022. Depending on who you speak to, the change in prices vary, with leading building societies Halifax and Nationwide provide differing data. Where in May the increase illustrated by Nationwide was shown to be 11.2%, by June it had dropped to 10.7%. The prices they calculated showed that these prices represented an average of around £30,000 more than in June 2021.
Compare these figures to what Halifax are saying and the average house prices in their opinion are 13% higher in June. This amount indicating a monthly increase of 1.8%.
What will bring house prices down?
The constant rise in interest rates is certainly a factor. In a world where potential house buyers cannot pay as much as they could have done – due to the rising rates – and sellers not wanting to budge from the house price valuation they were given. You end up with a gradual trickle down to slightly more affordable prices.
There are some that think the house price crash will come, others are not so sure. Whilst demand is still so high, yet supply still so short, there is no reason to see the prices tumble.
The constant hikes in energy prices, the rising inflation, and the general cost of living crisis will see people with less disposable income. Therefore, slowing the opportunity to save for a property. This alone will cause the demand to slow which could in turn cause the price increase to slow too.
This could result in one of two things, a gradual trickle down to lower prices or potentially a drastic reduction. Many believe it will gradually slow though, meaning prices could still be significantly high for a while yet.
If you are looking to sell and would prefer to find the quickest and easiest route to selling a house, let the team at SOLD.CO.UK help. Contact us today to see how our online estate agents can sell your house at no cost to you. We cover all legal fees and have no hidden costs whatsoever. We can put your home in front of 98% of the active buying market, giving you plenty of exposure and opportunity to get your house SOLD.
