The UK property market is currently on fire, with house prices increasing at rates not seen in a long time. The average house price is nearly 11% higher than it was a year ago, according to recent data. If you’ve been saving for a house, you may be debating whether to take the plunge now or wait until 2022 to buy, in the hope that prices will have cooled down.
Let’s take a look at what’s going on in the housing market right now, and what experts say could happen in the future to help you make a decision.
What’s currently happening to house prices?
According to the Nationwide Building Society, UK house prices soared by 10.9% in the year to May. This is the highest level in seven years and follows the 7.1% annual increase recorded in April.
The average UK house price has risen to £242,832, up nearly £24,000 over the past 12 months. Month-on-month, house prices increased by 1.8%.
Nationwide says that the price rises are being driven by a ‘race for space’. Buyers are searching for bigger homes and gardens after the pandemic ushered in a work-from-home boom.
In fact, research from the mortgage lender shows that nearly two-thirds of people who are moving or considering a move are doing so to increase the size of their property or to access a garden or outdoor space.
What’s the forecast for the rest of 2021
The massive increase in house prices over the last few months has raised concerns about whether we are on the verge of a housing crash.
However, the near term outlook for the property market is quite positive. Nationwide predicts that house prices will continue their upwards trajectory in the next six months.
Robert Gardner, Nationwide’s Chief Economist, explains: “as result of the stamp duty extension and additional support for the labour market included in the Budget, especially given continued low borrowing costs, improving credit availability and with many people still motivated to move as a result of changing housing preferences in the wake of the pandemic.”
Additionally, some of the other factors currently driving house prices up are expected to remain in place. These include:
- Government support in the form of the mortgage guarantee scheme
- A relative shortage of homes for sale
- Increased household savings that have put more people in a position to afford a home
What’s the forecast for 2022?
Further ahead, the outlook for the housing market and house prices is uncertain.
According to some market forecasters, house prices will fall in 2022 as unemployment rises following the end of the furlough scheme.
However, others believe that prices will not fall against the backdrop of a robust economic recovery in the third and fourth quarters of 2021.
It seems that only time will tell.
Should I buy a house in 2021 or wait until 2022?
Given the current market conditions, some buyers may be compelled to act quickly and purchase a home before prices rise further and their dream home potentially becomes completely unaffordable.
Others might be prompted to wait until 2022 in the hopes of snagging a bargain when the market cools. However, right now, there is no guarantee that the market will cool down in 2022.
So, should you buy a house now or wait until 2022? There is no easy answer.
Keeping track of and understanding the property market is undoubtedly important when it comes to deciding whether now is a good time to buy or not. Even more important, though, is figuring out what is best for your personal needs and financial circumstances.
Nobody knows for certain what will happen to prices in the future. If the house you want is available now, you can afford it and you are buying it as a long-term investment, it may be better to take the plunge rather than wait for something that may or may not happen in the future.