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House prices forecast to grow 4% in 2022

18 01 22 House prices forecast to grow 4 per cent in 2022 hero

95% LTV mortgages will support the continuation of house price growth.


Global commercial real estate firm Colliers is predicting that house prices will continue to grow by around 4.2 per cent in 2022, due to suppressed housing supply and five per cent deposit mortgage options.

While 2021 was a bumper year with house price growth reaching around nine per cent* across the UK (up from 0.9 per cent in 2019 and three per cent in 2020), largely due to the time-limited stamp duty holiday, growth is not expected to stall this year, and will instead remain in line with the ten-year average of 4 per cent in 2022, and an average of 3.5 per cent over the next five years, predicts Colliers. 

Figures from the Office of National Statistics indicate that construction of new housing has slowed in recent months, highlighting that once again house building is unlikely to meet the Government’s target of 300,000 new homes a year. Raw material and labour shortages as well as rising labour costs are thought to have contributed to this downturn in construction activity. 

Andrew White, head of Residential and International Properties at Colliers said: “Not once has the Government’s house building target been achieved, even when it was at 250,000 new homes a year two years ago. This lack of new supply will ensure a continuation of house price rises, alongside the return of five per cent deposit options and the Bank of England considering relaxing stress testing as well. Following a bit of an exodus from cities during the pandemic we saw prices in regional areas start to soar, but that will stabilise this year, although areas outside of London will continue to be more attractive to international buyers than they have been in the past. All of these factors combined is why we anticipate there will be a 4.2 per cent increase in house prices this year." 

House prices across the UK have surged in recent months growing an annual average of 8.9 per cent in the 12 months to October 2021, compared to 4.7 per cent in London. Increased working from home means that some, particularly higher earners, are prioritising more space and moving to larger homes in locations outside of the main UK cities, as opposed to being situated close to their workplaces five days a week. However London prices are on the up again with the reopening of hospitality and leisure venues strengthening growth in the capital, while regional prices are expected to stabilise. 

Andrew continued: “Institutional investors will also be looking at the regional cities for opportunities to put their cash into build to rent operations, where they can secure higher yields for lower capital values. We could see some major investments start to take place as those with established rents look to capitalise on their initial investment, exit and move on to the next scheme or investment.” 

Oliver Kolodseike, head of Economic Research at Colliers added: “With interest rates expected to rise over the medium term, mortgage affordability will remain a main constraint to even stronger demand for housing. We welcome the re-introduction of 95% LTV mortgages and predict house price growth to average 3.5 per cent over the next five years. This is only slightly below the four per cent average witnessed over the past decade.”

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Andrew White

Head of UK Residential & International Properties Asia

Residential - Development

London - West End

Andrew heads up the UK Residential & International Properties (Asia) Department at Colliers and is a specialist advisor in residential and mixed use developments.  He has been involved in some of the largest and most complex sites within the U.K.

The Residential Department at Colliers comprises a market leading  team of  surveyors and advisers who focus on London, The South East and the Regions, advising  clients on their options for maximising value for their assets, including planning, development consultancy, Build To Rent, investment and disposal strategy and New Homes & Project marketing, both in the UK and Internationally.

Andrew has worked in the sector since 1994  having started his career with a large multinational real estate agency, then running his own land agency for 8 years before joining Colliers in 2013. He has advised government bodies such as the NHS, as well as family businesses, funds, charities, developers and companies on their strategy for disposal of their land holdings and property assets.

Clients include, Legal & General, the NHS, Royal London Asset Management, The Diocese of London, London Square, Telereal Trilium, Threadneedle, Aberdeen Standard, Greggs, Rexel and PSA Group as well as other large corporate landowners.

View expert

Oliver Kolodseike

Director of Economics and Research

Research and Forecasting

London - West End

Oliver is Head of Economic Research and leads the quarterly UK forecasting process including the publication of Colliers' Real Estate Investment Forecasts (REIF) report. He also  authors the monthly Property Snapshot and, quarterly Scotland Snapshot. Prior to joining Colliers, he worked for the Centre for Economics and Business Research and IHS Markit. Oliver holds a BA in Economics from  Georg-August University Göttingen (Germany) and an MSc in Economics from Exeter University.

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Kim Inam

PR Manager

Marketing & Communications

London - West End

I'm a communications professional who has previously worked as a journalist for eight years covering a broad range of topics including politics, crime, health and housing in north London. In recent years I have worked in corporate communications for local authorities across London  and joined Colliers in October 2019, initially providing maternity leave cover.

I provide strategic public relations advice to various business lines within the UK organisation to secure recognition for their work in the property press as well as key target media, and work with our experts to produce thought leadership pieces which are of interest to our clients and colleagues within the commercial real estate sector. In addition, alongside colleagues in the PR and wider communications team, I provide media and social media training for our in-house experts to prepare them for media opportunities and raise their personal brand within the sector.

As well as supporting various teams within the UK business, I also I curate and edit regular content for the Colliers.com blog, which drives credible business leads to our experts.

 

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