2021 saw UK house prices increase by 9.8%, one of the largest annual amounts that the market has seen since 2003. However, with the cost-of-living crisis hitting the UK at full force, this rate is expected to slow down throughout 2022.

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According to the Halifax House Price Index, UK house prices last year rose by a staggering average of £24,500 by the end of 2021.

However, while the current annual rate of growth continues to remain at a steady 9.4%, we are already starting to see monthly house price growth begin to fall as a reflection of the cost-of-living struggles that many people within the UK are facing.

New data reveals that in January, while house prices did grow, they increased by only 0.3%, one of the lowest monthly increases since June 2021.

Could this be a sign to expect house price growth to continue to slow down throughout the year?

Russell Galley, Managing Director at Halifax stated that:

“Transaction volumes are returning to more normal levels [and] affordability remains at historically low levels as house price rises continue to outstrip earning growth.”

In 2021, the UK faced eight peaks in house price growth despite the country being in lockdown for the first part of the year.

However, despite lockdowns and some people facing a cut-back in wages, there were many contributing factors such as a relief in Stamp Duty which impacted the great rise in house prices.

Market experts continue to suggest that while inflation rises and that it’s likely that we may see further increases in interest rates this year, the growth of house prices is unlikely to continue at its current speed – a great sign for those already feeling the effects of a tightened household budget.

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Sarah Coles, a Senior Personal Finance Analyst at Hargreaves Lansdown, also mentioned that the cost-of-living crisis has put an immediate break on increasing mortgage prices.

“Prices were still going up in January, but far slower than for the previous three months.”

She then added:

“The number of sales dropped back to the kinds of levels we saw before the pandemic.”

However, despite this, it is worth highlighting how the pandemic has widely affected house prices, and that the current market is continuing to feel the ongoing impacts.

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With many variables which could push house prices either way of the scale, it is incredibly hard to predict exactly whether or not growth will continue to slow. However, it is clear that evidence points in favour of house price growth slowing down as a predominant result of the cost-of-living crisis.

It also makes it impossible to identify the ideal moment to buy until it has passed.

Instead, it is now encouraged that those looking to move house or buy additional properties or first homes should carefully consider how affordable the choices are alongside rate rises and bill hikes.

Coffey Brooks are a team of Independent Financial and Mortgage Advisers based in Clacton-On-Sea, Essex and are directly authorised and regulated by the Financial Conduct Authority.