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UK house price growth will remain robust next year but will be “much flatter” as rising inflation and interest rates, coupled with the end of government support measures, place greater pressure on household budgets.

Prices are expected to inch up around 1 per cent in 2022, but “forecast uncertainty remains very high,” Halifax said this morning.

The mortgage lender’s prediction represents a considerable slow-down from this year’s 8 per cent rise.

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Job support scheme extensions, coupled with the stamp duty holiday and continued limitations on spending opportunities for consumers, helped drive sales as buyers found themselves with more fund available and brought transactions forward.

“The UK housing market continued to defy expectations during 2021,” said Halifax managing director Russell Galley.

He pointed out that record-low interest rates pushed price-to-income ratios to historic highs, which “has particularly stretched first-time buyer affordability”, but the lender expects this to weaken next year.

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“As raising a suitable deposit continues to be a significant barrier for many looking to get onto the property ladder.”

“With the prospect that interest rates may rise further in 2022 to subdue rising inflation, and with government support measures phased out, greater pressure on household budgets suggests house price growth will slow considerably,” Galley said.

“Nevertheless, interest rates will remain low by historic standards and property prices will continue to be supported by the limited supply of available properties.”

Galley added that house prices growth will be broadly flat in 2022 – “perhaps somewhere in the range of 0 per cent to 2 per cent.”

By AMY O’BRIEN

Source: City AM

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