Uk Market

The ever-increasing house demands have pushed the Uk property market trend to new heights. It was partly due to a dramatic increase in the UK economy growth in 2022.

The market is becoming highly saturated as more people want to buy a house. However, the supply of houses can’t cater to the demands. That’s why we see the historic rise in Uk house prices in 2022.

Being a house buyer, you may not be so confident about putting your money in the housing sector.
Amid the uncertainty looming over your head, you want to get a clear picture of what’s happening in the market.

You want to remain up to date with the changing house prices. You may also need to know the right time to buy a house. If you have these questions in your mind, then you have come to the right place.

What’s happening with the housing market since 2022?

Uk Interest Rates

There has been a lot of outcry about the rising UK house prices in the last couple of years. Residents from all over the country, whether in England, Scotland, North Irelands or Wales, have seen a steep curve in the costs of purchasing a house.

The industry is sparked by a wave of inflation, whereas the cost of living is causing citizens to spend less on houses and save for the rest of the year till the market cools down.

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Sneak Peek Into The Previous Year’s Trends:

Uk Interest Rate Forecast (2)

It all started with the outbreak of the pandemic. People were hesitant to put their money in the property industry. Thanks to the stamp duty holiday by Uk’s govt in 2020, the market began to see a rebound after a temporary halt.

The main purpose of exempting the stamp duty was to win back the buyers’ confidence in the market. On a house purchase below £500,000, you don’t need to pay any stamp duty tax. It helped the people roll out the money into the market.

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But by that time, the average house prices had risen sharply. Those housing prices were greater than the highest in the past decade since 2004. Though it was decided to end the tax relief by March 2021, the exemption remain intact till the mid of 2021 and finally ended in June of the same year.

According to the Office of the National Statistics (ONS), the prices in June 2021 increased by 13%. It’s interesting to note that the prices jumped from 9.8% in May.

The immediate stretch of price rise was a new phenomenon in the Uk property market for decades.

Housing market trends in 2022:

Buyers remained uncertain the whole year till the end of 2021, and the arrival of 2022 brought a sudden slump in prices by 9.8% in January.

Besides, the UK’s economic growth wasn’t satisfactory in that period. The market went up and running till June when the first spark of sanity blew inside the market. In June, we have seen prices falling back then in May 2022.

uk house prices 2022

The sudden decline in residential property is contributed to the high cost of living. According to ONS, the country is facing sky-rising pricing of goods and utilities. Even the consumer price index has increased 10% the previous year. Due to high living costs, people are spending less on buying new houses.

What Factors Are behind The House Price Hike?


There are a lot of external factors and government decisions that have led to rising house prices in the UK. Below are some of the reasons you see the sky touching prices.

Economic Growth:

In the wake of the pandemic, people pulled out their money from the housing sector. They saved their finances to get away with the testing times. That’s why they saved money to spend on the luxury economy, such as buying and renting or selling a house to earn profits.

In 2020, govt issued a stamp paper exemption to keep the cash flow going in the house economics. It increased the spending in the housing industry as more people took advantage of this opportunity. Stamp paper holiday helped them save thousands on the house below 500,000 pounds.

It helped the economy grow and brought more buyers. With increased demands, the average prices of the houses went up.

Bidding Wars:

The current UK house prices hike has seen a new phenomenon. As more people came out to buy a house, the competition grew. Sellers took advantage of this situation and sold the houses for more price than the initial demand.

Buyers get to head in bidding wars. They started bidding on a single house, so the prices went above the average price of the houses.

Low-interest Rates:

In 2020, the UK interest rates were very low as compared to 2022. Loans were readily available, as anyone could easily get a mortgage to finance their house purchase. In march 2020, bank rates were around 0.1, so people even went for SVR rates to get a mortgage. Moreover, banks were eager to provide loans.

People wanted to seek this opportunity of historic low-interest rates. In addition, the stamp paper holiday added to the benefits. BoE rates remained the same till December 2021.

During that period, the housing market saw a boom as many hoards of people came to get a mortgage to purchase houses. It further increased the demand, setting the prices to the highest in the last 20 years.

Is The Housing Market Going to Crash?

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It seems to be an outright and bold statement, as the recent stats don’t show a slight indication of any impending crash. The main thing that triggers a deep plunge is the demand for residential property. We are nowhere near a demand-less market.

The demand for new houses will remain by the end of the year, and the low supply will still push the market to a reasonable position. However, we cannot rule out the slowdown of the market.

Mr Bassister, a Rightmove director, indicates that the imbalance between supply and demand will prevent major price falls this year.

There are some factors softening the harsh market. Rising living costs, higher interest rates and taxes are paying the dividends to bring down the insane prices to normal ones.

Uk interest rate forecast

Apart from the stamp duty holiday, low-interest rates from the Bank of London boomed the market. But, now, the banks are increasing the interest rates quickly. Bank of London in its last meeting held in 2022 has increased the interest rate to 1.75%.

It is the highest rise in rates since the market crunch in 2008. If the banks keep on increasing their rates at the same pace, which is likely to happen, the buyers will stop putting their money in the market.

The reason is that they won’t afford to pay high repayments and tend to sell their houses. Since the rates will cross the mortgage repayment, causing the demand to decrease.

Due to the rise in energy prices, the gas and fuel charges have soared up– increasing the household bills.

The slowing down of the market makes you think of the right time to buy a house in the UK. Being a house buyer, you are always trying to find the right deal.

Therefore, time plays a vital role in the whole venture. Besides, you must follow some important metrics before investing in the market. The rise and fall of market factors to gauge the house prices and to call your shots for the right choice.

In addition, you need to take into account the values like mortgages, interest rates, cost of living and taxes. Right now, the market is going through a dramatic turn by the end of the year.

As of August, the market shows a month-to-month slowdown, while the demands remain high. According to Halifax, the average house prices have decreased by 0.1% in July, ending all-time high figures for the past six months.

It decreased UK house prices from £294,845 to £293,221 in July, cutting several thousand. Moreover, the number of houses sold has also decreased. It’s 55% more than the previous year according to HMRC.

Rising UK interest rates cause the turn of events, and as we can see that govt is trying to handle the inflation, the rates are likely to increase.

Therefore, it seems not the best time to buy a house because your mortgage rates will become unaffordable soon. However, you can save money until the market behaves normally and interest rates return to old figures.

Banks are cracking down on the high inflation by increasing the bank rates. A sudden increase in the base rates by 0.1% can affect millions of homeowners in the UK. As of now, 2 million homeowners either have an SVR or variable tractor rates on their mortgages.

As the lurking fear of inflation is weighing hard on their expenses, the fear of a rise in the rates. To meet the BoE decision, lenders will increase SVR and tracker rates by 0.5%. It will further accelerate the loan costs.

In this grave situation, the fixed rate borrowers are also not immune from high costs. More than 40% of the fixed rate will end soon, thus exposing the homeowners to a sudden increase in their mortgage costs.

Most loan providers have adjusted their rates to meet the base rates. They understand the gravity of the situation. Let’s find out how SVR and tracker interest rates affect the repayments.

There are one-quarter of borrowers on SVR rates. As the BoE has increased the base rates, the average interest amount will become £90 monthly. After a year, a borrower has to pay an extra £1080.

That’s how the interest rates will translate into an extra burden on the borrower. In addition, the inflation compounds their anxiety which may lead to house sales unless things don’t work out for them.

Savvy house buyers know the current intense circumstances. Amid the UK economy growth downtime, they are worried about their finances.

They may even hold their money for the right time to invest in the housing industry. Therefore, house buyers want to make forecasts for the next five years to see if that’s the right tie to buy a house to get a mortgage.

BoE increased the interest rates by 0.25% in August to deter people from spending more. It will hinder inflation and may even control the prices of goods.

With that said, the increased rates will affect the housing industry, and people will become less confident spending their money in the housing sector.

The monetary committee has issued a forecast explaining how they will increase the interest rates in the following years. Before moving toward the figures, let’s determine the factors that may increase or decrease the rates.

UnControlled Inflation Will Increase The Interest Rates:

Uk 2022

UK’s finance ministry has targeted inflation on 2% after the pandemic. In March 2021, it was below 0.7% but increased suddenly in the past year. In August, inflation reached 10.1%, making it the highest in the past two decades.

Bank of London struggles with controlling the prices of goods and utilities, as recent estimates state that it may rise upto 13% by the end of this year. This rate is historically the highest one in the past.

UnEmployment Is On A Steady Rise:

Uk Interest Rates

Greater the number of employed, better the economic conditions. Currently, unemployment is ramping up and has reached a higher level than the Covid times.

Every month people are getting fired, and the number of unemployed is increasing. On the other hand, a high employment rate increases economic activity and helps the citizens to get loans even at higher rates.

According to the official UK interest rate forecast, the bank of London is expected to raise the interest rates to 3% in 2023. However, independent lenders expect more rise than the official figures.

Final words:

The Uk property market is going through the most testing times ever. Since the economic crunch of 2009, there has been relatively controlled inflation. Only after the Covid-19 the UK economic growth turn upside down. That’s why we see a sudden rise in fuel prices and household living products.

To cope with the rising prices of goods, Uk’s monetary committee took bold steps. They have increased the BoE interest rates. In August, the interest rates reached 10.1%, higher than in the past 20 years.

Due to the rise in interest rates, house prices have dramatically increased, creating the supply and demand crisis. However, the prices have toned down, but the interest rates are still high. According to BoE forecasts, the rates can reach 3% in the next few years.

In a nutshell, it’s not the right time to buy a house because you may end up paying costly mortgage repayments. This article explained the current house market trends, factors affecting house prices, reasons for inflation, and interest rate forecasts. After reading it you will get an overview of the housing landscape in the UK. Feel free to let us know about your feedback.

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