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Will the housing market crash? Could UK property prices fall in 2022 - and when are they likely to come down

The UK’s largest online real estate website has predicted that the cost of living crisis and soaring inflation rates will have an impact on the UK housing market

There are growing concerns that the UK is headed straight towards another housing market crash.

Since the Covid-19 pandemic house prices have risen by a record-breaking £55,551 according to Rightmove.

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But, the online real estate website has predicted that the market will see “falls during the second half of the year.”

With inflation expected to hit 10% by the end of the year, many homeowners are left wondering how this will affect them and their house prices.

The housing market is overheated, with soaring prices making it impossible for first-time buyers to get onto the property ladder.

There have been signs that the UK is set for another recession, with soaring living costs hitting households hard.

The last time the UK entered a prolonged recession in 2008, house prices crashed, leaving many homeowners in negative equity.

Here’s everything you need to know about whether the housing market will crash in 2022.

How much does it cost to buy a house in the UK?

Buying a house in the UK has risen steeply since the Covid-19 pandemic.

There are growing concerns that the UK is headed towards a housing market crash (Pic: Getty Images)

Latest figures show that house prices in England have reached a record high.

The average house price in England according to Rightmove is now £368,614, up from £367,501 the month previous.

This leaves many first time buyers priced out of the market, even if they have a stable income and a deposit.

Low interest rates have also made borrowing for a mortgage cheaper.

After the pandemic, there was a surge in demand for houses.

Halifax described this as a “race for space” where people who lived in the city moved to the countryside.

Will the housing market crash in 2022?

There is growing speculation that the housing market could crash in 2022.

High interest rates coupled with the cost of living crisis has seen households squeezed as they try to afford rising energy and fuel costs.

The Bank of England has predicted that inflation in the UK will hit 10% by the end of 2022.

However, despite this, house prices have risen consistently, making it the longest steady price increase for six years.

Low mortgage rates are still driving the market, but there is concern that soaring inflation will increase mortgage rates and put buyers off.

Tim Bannister, Rightmove’s Director of Property Science has predicted that there will be price falls in 2022.

He said: “After a very strong first half of the year, it is likely that the housing affordability crunch will have a greater impact on market behaviour in the months ahead, with further interest rate rises anticipated during that period.

“This, alongside more choice coming on to the market for buyers and the usual seasonal variations we would expect, means there are likely to be some month-on-month price falls during the second half of the year.”

If the UK goes into recession will house prices go down?

When a country goes into recession, house prices will inevitably fall.

With higher cost of living and risk of unemployment, many prospective buyers will be unable to purchase a home, or even start planning to.

Recessions also bring much uncertainty, meaning banks are often reluctant to lend.

According to the Office for National Statistics (ONS), during the house market crash of 2008, the average UK house price dropped by 15%.

What happened during the 2008 housing crisis?

In 2008, the UK went into a recession and the house market collapsed.

The recession was caused in part by banks lending mortgages to people who were unable to pay them.

Staff from Lehman Brothers leave their offices in London, 2008 (Pic: Getty Images)

Overnight banks went bust, with big names such as the Royal Bank of Scotland having to be bailed out by taxpayers.

Between 2008 and 2009 the average UK house price dropped by 15%.

Many homeowners were left in negative equity, which is when the value you have paid for your property is below its worth.