(Bloomberg) --
U.K. house prices probably will struggle to rise in 2022 after two strong years of increases, one of the nation's largest mortgage lenders said.
Halifax said it expects 1% growth in the cost of an average property next year after an 8% gain this year and 6% in 2020.
A tax break on property purchases along with pandemic lockdowns that prompted consumers to seek more spacious houses with room to work from home fed increases this year. Next year, rising inflation and taxes will eat into household spending, while the Bank of England, which hiked interest rates for the first time since the pandemic began on Thursday, is expected to continue increasing the cost of borrowing.
“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,” Russell Galley, managing director of Halifax, said in a statement on Friday.
Halifax's prediction is more pessimistic than other forecasters, with Rightmove saying earlier this month it sees a 5% rise in 2022. Still, the lender said there's a “large degree of uncertainty” around its outlook, especially about how much savings consumers built up during the pandemic. It's also not sure how durable the trend is toward living further away from the heart of cities such as London.
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