Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

SINCE the pandemic began, house prices have risen 16%. This year alone, the average house is up more than £24,500, according to Halifax - the largest annual rise since 2003.

The housing market isn’t quite in a bubble, but recent activity does make you think that something’s got to give. Where exactly is the housing market heading in 2022?

Prices could fall

There’s good reason to think the market will calm this year.

During the pandemic, lockdowns allowed many households to save, while the temporary halt to stamp duty on properties costing up to £500,000 offered an attractive buying opportunity.

Now, stamp duty is back, and households have either used up their cash or have found other ways to spend it. Though the market’s yet to notice - prices continued to rise by 3.4% in the three months to the end of November, the highest quarterly rise since 2006 - you would expect demand to eventually ease.

Rising interest rates could also prove significant. Halifax says: “The prospect that interest rates may rise further this year to tackle rising inflation and increasing pressures on household budgets suggest house price growth will slow considerably.” However, with almost all new mortgages now fixed-rate, it could be a while before the impact filters through to the market.

Let’s not forget too about Omicron, or the threat posed by any future variants.

Prices could rise

Some pandemic trends, such as the “race for space”, are proving more entrenched.

When the pandemic kicked in, the opportunity to work from home saw many wealthier households migrate from the suburbs to more spacious homes in the countryside.

Nearly two years into the pandemic, that trend is persisting. Wales continues to exhibit the highest rate of price rises, with the North West the strongest region in England.

Moreover, while demand remains robust, supply is falling far, far short. The property professionals’ body Propertymark reported that there were just 20 properties available per estate agency branch in November - the lowest figure ever recorded, and 50% higher than in 2020.

Supply may begin to catch up this year, though the Royal Institute of Chartered Surveyors thinks it unlikely. Last month it said: “The imbalance compared to the demand trend is likely to continue to be a key factor supporting prices and indeed, it is likely that house prices will continue to move higher through the coming year.”


On balance, you’d probably expect the market to flatten over 2022. If nothing else, indefinitely escalating prices will eventually price out buyers. With the cost of living also rising sharply, we may reach that apex soon.

Still, I wouldn’t bet your house on it.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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