In February 2022, house prices had increased by 11% since last February. So should you bide your time to buy in the hope that the market slows down? Or could we see prices rise further in 2022?

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We were warned by the Bank of England back in May 2020 of a potential 16% fall in property prices due to the pandemic. With social distancing measures and other lockdown restrictions in place, we (understandably) expected house prices to fall since the demand for new mortgages was likely to be low. However, it appears the market has defied the odds: not just surviving but positively thriving. According to the Halifax House Price Index, the average house price in the UK hit a new record high £278,123 in February 2022. That’s an increase of 10.8% in the space of 12 months.

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Why have house prices increased so much?

The pandemic has set new property market behaviours in motion. The rapid increase in house prices is arguably due to;

• High demand and low supply
• Stamp duty holiday (this scheme ended in October 2021)
• People wanting to move out to more rural areas with more space and outdoor areas (made possible with remote working)

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The sharp increase in house prices has lead many people to lean towards renting for the time being before buying a house. Whether or not it's worth waiting to see if the market is going to level out over 2022 is completely dependent on your own personal financial situation. Check out our blog on the pro's of both renting and owning your own property. This blog discusses whether or not it is actually cheaper to rent or buy in general.

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Is now a good time to buy a house?

If you want to buy a home now, there is no denying that buying a house is more expensive than pre-pandemic. House prices rose so much in 2021 that the growth wiped out any savings that many people made using the stamp duty holiday. Despite the Bank of England increasing interest rates in February 2022 from 0.25% to 0.50%, and again to 0.75% in March, we are still able to find historically low mortgage rates for our clients. However, there is no doubt mortgage interest rates have risen slightly in recent weeks.

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Are house prices going to drop in 2022?

The Times details a number of factors that could cause house prices to fall:

• The pandemic is not over and future restrictions can’t be ruled out.
• We are in a cost of living crisis as inflation is rising, making goods and services more expensive compared to a year ago, which could impact on houses coming to market.
• Rising costs, especially energy bills, could see people struggle to make their mortgage repayments and need to sell up. Housing supply will increase which could cause prices to fall.
• Interest rates have increased from their record lows, making mortgages more expensive. This could reduce demand.

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Predictions for 2022 from the experts

“After the record levels of 2021, we’re expecting the housing market to die down,”
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown.

Russell Galley, Managing Director, at Halifax believes that house prices will “maintain their current strong levels” but that growth will be broadly flat during 2022 – perhaps somewhere in the range of 0% to 2%.

You could argue that the impressive rise in house prices over 2021 will be difficult to maintain and/or replicate throughout 2022. The pandemic was a catalyst for demand, plus the low mortgage rates and stamp duty incentives that were thrown into the mix only escalated the matter. With inflation and interest rates on the up, the housing market prices might level out.

It's a tricky time for house buyers (especially first time buyers) waiting for the property prices to drop. Sadly, there is no guarantee that that will happen - and with the property market defying the Bank of England's May 2020 predictions, it is tough to hold out on such a big decision. This being said, the property market has proven to be very resilient in challenging circumstances like the pandemic.

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When is the best time to buy a house?

Within the property market, there is much speculation about the best time of year to buy and sell your home. Like trading other investments, you can try to play the market to your advantage and this certainly applies with investment buyers, but when it comes to selling a home, it is often more about the right time for you rather than trying to judge the wider market.

There are, however, peaks and troughs during the year and being aware of the cycle will help you make the most of the opportunity, but don’t forget this doesn’t take into account your own reasons for wanting to sell.

According to rightmove (and the general consensus on google) - Spring is the most popular time to buy and sell. It means that you can be in your new home by the summer and the enthusiasm from the New Year is still in the air. So, if you're looking to sell quickly, get your property on sale in March as there are more house-hunters hunting!

Unsurprisingly, school holidays are slower months for buying and selling property. August and December being the hardest months to shift and list due to it being peak summer holiday time and Christmas.

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So, is NOW a good time to sell my house?

After all the above! We are in March, which means (according to google) it's a great time to sell. It is definitely a sellers’ market at the moment, so you could get a great price if you sell your property now. If you're in the fortunate position of having a rental property to sell without needing to buy another property, or if you're down-sizing to a smaller or less-expensive area, then now is definitely the time to sell, sell, sell!

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As always, if you have any questions about residential mortgages, the go2mortgages team are here to help. We don't have a crystal ball and we can't predict the future, however with more information from you on your circumstances we can help you explore the best options for you.

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We also have close links to Sales and Lettings experts in Gloucestershire and London should you have any questions about rental properties too. Please reach out using the details below:

go2mortgages - liam@go2-mortgages.co.uk

Move Sales & Lettings - enquiries@move.uk.net

Hume Estate Agents - Fulham