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Will the UK housing market crash in 2022?

Many wonder, some even hope, the UK housing market will crash in 2022. UK property prices over “The Pandemic Years” has seen seismic increases. In the 12 months to December property prices rose 10% in 2021 but will they continue to rise in 2022? Or will interest rates and the cost of living bring an end to double digit increases? Here are some of the possible twists and turns on the road that could make or break the UK property market. 

Rent increases and returns to City Centres

Whilst some have left the buy-to-let market scared of EPC grade C legislation and rising capital gains costs. Others have taken advantage of low mortgage rates during the pandemic and increased their portfolios. Despite this, stock levels remain low, which has caused average rental prices to rise 1.8% in the 12 months to December 2021 or 2.7%, if you remove London from the equation. Despite London dragging the national average down. I expect a spectacular comeback in the spring, as Omicron fears recede, & working from home measures are lifted.  

Build to Rent Sector

Lloyds and John Lewis are determined to diversify their portfolio by gaining market share in the build-to-rent sector. Lloyds with 50,000 units and John Lewis with 10,000 units in the next 10 years. I expect this sector to grow substantially over the next few years as developers look to offer renters, EPC Grade A accommodation with communal areas at a price tag. (That is guaranteed to increase year on year.)

UK House Prices

The average UK house price increased 10% over the year, to £271,000 in November 2021, which is £25,000 higher than the same time last year.                        Due to lack of stock and increased demand, I expect a busy spring for the property market followed by a much slower, more measured pace towards the end of the year. Prices will stabilise as the cost of living catches up with buyers and interest rates rise further. In some areas property prices may even recede slightly. However expect owners to doggedly cling to their price. As they refuse to not be out done by their neighbours who sold during the stamp duty holiday.

The corporate mystic Megs of the property world have predicted average property prices to rise from anything between 2-6+%. As I don’t have a crystal ball or a headscarf, I don’t have the expertise to comment, however my money is on the lower end.

If there is to be a small correction to the market, I’d expect to see it in 2023 not 2022.  


To compensate for the rising cost of living and house prices v wages. The Bank of England is considering reducing the affordability threshold on stress tests, for buyers looking to get a mortgage. If they forge ahead with this, Property prices will remain buoyant by the increased competition from buyers.

40-year mortgage options. 

Habito and Kensington Mortgages have paved the UK way on this. Given it provides stability for banks and buyers alike, albeit at a higher rate, I anticipate more lenders will follow suit.

Green Mortgages

Green Mortgages give favourable rates or cash back rewards to those buying energy efficient homes or looking to make improvements to their existing property. Given the emphasis on energy efficiency, it makes sense homebuyers will be drawn towards these more and more. 

EPC C Energy Efficient target 

The Government’s determination to achieve Net Zero is commendable but many won’t feel quite so conscientious when faced with a £10,000 bill of works, to update their property. Multiply this by the number of properties owned by each Buy-to-let landlord, and you can be excused for wanting a drink. Government grants are being issued from April for around £5,000, to help with some of the costs, but it will still be a massive financial burden for many. 

Permitted Development for commercial to residential property

Since the Governments March 31st 2021 amendment to permitted development rights for the conversion of class E commercial properties into dwellings without the need for express planning permission. Many landlords, struggling to find tenants, have explored turning commercial units to residential homes, and will continue to throughout 2022. 

Rise in Repossessions

Over Christmas mortgage lenders collectively agreed not to evict during the festive period. Now the season of giving is over, we could see repossessions rise in 2022, as a delayed result from pandemic struggles.  UK Finance figures from the third quarter of 2021 stated 27,980 homeowner mortgages were in significant arrears (owing 10pc+ of the outstanding balance). The final grace period of 4 months for any cases placed between the 1st of June until 30 Sep 21 comes to an end in January. Meaning, depending on individual lenders’ sense of charity, there could be many struggling this year.


So will the UK housing market crash in 2022? 

No, I don’t think the UK housing market will crash but it will feel deflated after “The Pandemic Years” of excess. 

Whatever 2022 holds, one things for sure. It promises to be no less dramatic than 2021, only this time, in a different way.

Till we know more… keep invested.