10 per cent. This figure is expected to drop to between 3 and 5 per cent next year, as borrowing costs increase and household budgets come under mounting strain.
Nevertheless, in London’s wealthiest boroughs, house price growth is expected to outstrip those recorded this year, and according to forecasters, it may beat the figure for the UK as a whole. Property firm Savills projects a 6 per cent growth in prime London neighbourhoods in 2022, amounting to a 3.2 per cent increase from the previous year. As offices reopen and people begin to return to the city, Savills said prices for had started to rise again.
“Activity levels have picked up significantly over recent months, but the renewed Covid-19 uncertainty adds an unwelcome additional layer of doubt that will likely push the expected bounce in values further into 2022,” Frances Clacy, an associate director at the real estate company, said. “Still, we believe it’s a question of when and not if prices rebound, particularly as more pent up demand builds, so prime central London remains a market to watch closely. Its bounce can be surprisingly rapid.”
Meanwhile, elsewhere in the country, house price growth across the UK is expected to drop to 3.5 per cent next year, according to Savills, largely in line with the projection made by the Royal Institution of Chartered Surveyors (RICS), which predicts house prices to end 3 to 5 per cent higher than at the start of 2022.
“2021 has been an exceptionally active year for the housing market, with transactions close to record levels,” Tarrant Parsons, an economist at RICS, said. “However, despite more homeowners seeking more space and various incentive programmes… transaction activity for the coming 12 months will inevitably slow. All else being equal, higher borrowing costs will dampen demand across the market to a certain extent. The major challenge will be around the lack of stock on the market with inventory back close to historic lows, and shows little sign of easing.”
