2022: A review of the UK’s housing market

As 2022 has come to a close it has yet been another year of surprises within the UK’s housing market. Wider economic factors such as rising interest rates, the cost-of-living crisis, and the government’s leadership challenges have all been big talking points.

Since the global pandemic house buyer behaviours have drastically changed – from the ‘race for space’ to buyers looking to move from city locations to more rural locations as remote working and hybrid working have given people more opportunity to strike the much-needed work/life balance.

However, buyer demand has far outweighed housing stock availability – thus creating the ongoing surge in property prices. This was initially exacerbated thanks to the stamp duty holiday, yet even when this came to an end record-low interest rates and people re-evaluating what’s important continued to fuel this trend.

By the end of 2022, despite a lot of financial uncertainty, the housing market has continued to grow – the question now is, will we now see demand among buyers dampen and will house prices begin to dip?

House prices

House prices are always a hot topic among the great British public and in 2022 they continued to surpass many people’s expectations.

According to the ONS, the UK’s house price index for Oct 2022 revealed:

  • Average UK house prices increased by 12.6% over the year to October 2022, up from 9.9% in September 2022.
  • The increase in the annual percentage change was partly caused by a sharp fall in UK average house prices in October 2021, following changes to Stamp Duty Land Tax.
  • The average UK house price was £296,000 in October 2022, which is £33,000 higher than this time last year and little changed from last month.

While this doesn’t give a full picture of the last three months of 2022 – based on other house price index sources it’s still possible that house prices have continued to increase YoY, for now, it seems.

Interest rate changes

One of the biggest challenges the UK’s economy faced was rising inflation. Even by the end of 2021 the Bank of England’s Monetary Policy Committee (MPC) had voted to increase interest from its lowest-ever rate of 0.10% to 0.25% to help combat rising inflation.

Wider economic challenges such as increased fuel duty charges, the war in Ukraine, the cost-of-living crisis and the government ‘mini budget’ were some of many factors that influenced rising inflation. Therefore, by the end of 2022, the Bank of England raised interest rates to 3.5% – the highest they have been in 14 years.

Here’s a summary of the increase over the past 12 months:

Month Base Rate Change
15 Dec 2022 3.50% 0.50
03 Nov 2022 3.00% 0.75
22 Sep 2022 2.25% 0.50
04 Aug 2022 1.75% 0.50
16 Jun 2022 1.25% 0.25
05 May 2022 1.00% 0.25
17 Mar 2022 0.75% 0.25
03 Feb 2022 0.50% 0.25
16 Dec 2021 0.25% 0.15

Rising interest rates have been dubbed as a ‘ticking time bomb’ for many with mortgage renewals due in the next three months as homeowners struggle to offset any increases to their monthly mortgage repayments while gas and electricity prices remain at an all-time high.

Stamp Duty Land Tax (SDLT) changes

Under Liz Truss’ leadership of the Conservative party, then Chancellor, Kwasi Kwarteng, raised the Stamp Duty exemption from £125,000 to £250,000 as part of the party’s ‘mini budget’. There was also an increase in the First Time Buyer discount, increasing that exemption from £300,000 to £425,000, with a discounted payment on properties up to the value of £625,000.

Property or lease premium or transfer value SDLT rate
Up to £250,000 Zero
The next £675,000 (the portion from £250,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%


In October 2022 you buy a house for £295,000. The SDLT you owe will be calculated as follows:

  • 0% on the first £250,000 = £0
  • 5% on the final £45,000 = £2,250
  • Total SDLT = £2,250

Use the SDLT calculator to work out how much tax you’ll pay.

*Source gov.uk

First-time buyer SDLT rates

For first-time buyers the discounted (relief) rate for those eligible has increased as follows:

  • no SDLT up to £425,000
  • 5% SDLT on the portion from £425,001 to £625,000

You are a first-time buyer and purchase a property for £500,000. The SDLT you owe will be calculated as:

  • 0% on the first £425,000 = £0
  • 5% on the remaining £75,000 = £3,750
  • Total SDLT = £3,750

*Source gov.uk

These changes, at the time, were positioned to be permanent. However, under yet another new leadership of Rishi Sunak as PM, Chancellor of the Exchequer Jeremy Hunt subsequently confirmed stamp duty cuts would only remain in place until 31st March 2025. This is to support the housing market and those working within it, after which changes to nil-rate thresholds will be reversed.

Market predictions for 2023

Of course to predict what may happen in 2023 is slightly challenging, after a turbulent few years of rising house prices it is likely that with increased interest rates and testing economic challenges affecting buyers’ affordability house prices could drop slightly.

Here are some thoughts from industry experts:

Rightmove’s property expert, Tim Bannister, says: “We’re heading towards a more even balance between supply and demand next year, but we don’t expect more significant price falls in 2023. This is reflected in our prediction of a relatively modest average fall of 2% next year.”

Zoopla’s Richard Donnell, Director of Research and Insight said: “While many forecasters have made bearish predictions for 2023 – anticipating house prices falls of 8% to 12% and a significant fallback in sales numbers – we’re more positive about the outlook.

“We’re anticipating 1 million housing sales in 2023, supported by more working from home, the ongoing spike in retirement and a greater consideration of home running costs.

“New mortgage rates are manageable: banks are well-capitalised and ready to lend. We expect mortgage rates to be at 4.5% to 5% in January 2023 which will add to buying costs, but not excessively.”

“Overall, I think 2023 may well disprove the gloomy forecasts made when the outlook for mortgage rates looked much worse.”

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