The Housing market challenges in 2022

The Housing market challenges in 2022

Despite predictions to the contrary in lieu of the effect of the pandemic, property sales and prices rose to an unexpected high during the last year. This was noted all over the country.  In the South East, as estate agents in Cheltenham will agree, this trend also saw an impact on houses for sale in Leckhampton Hill and surrounding areas

However, is the bubble now getting ready to burst?   We look at the challenges facing the housing market in the coming year.

Reasons for the boom in the real estate market: 

There have been many reasons why property was in such high demand.  Some of the incentives to raise sales and prices have now been withdrawn, which may result in a challenge to the market in the future.

● The SDLT holiday:  

The Stamp Duty Land Tax holiday, introduced in 2021 and phased out at the end of September 2021 was one of the main factors.   The savings in land tax caused many people to make decisions to invest in property.

● Low interest rates:

 With the Bank of England maintaining a low base rate and the Government’s 95% mortgage deal, to help with turning “Generation Rent to Generation Buy”, more people were able to take advantage of the low interest rates and invest in property.

● Race for Space:   

With so much competition in the market, there was a rush to obtain the best deals within the time frames.  This also led to an increase in purchases as well as prices.

● Effect of lockdowns: 

Many people had to work from home during the lockdowns.  This led to a desire for more space.  A high percentage of the population opted to move to larger, spacious accommodation inclusive of an office room, preferably in the suburban or rural areas where social distancing would not be a problem. 

A desire for outdoor space or garden for relaxation became a priority.  This trend is continuing, as there are still some people working online from home.  Due to this, sales of larger properties increased and so did the prices.

● Savings:  

Due to the closure of entertainment venues and restaurants, pubs, etc, people’s expenditure was automatically cut, resulting in a tidy sum of unforeseen savings.  Some opted to put down a deposit for a new home.

● Demand exceeding supply:  

The imbalance between supply and demand has caused the rise in property sales and prices.

The challenges facing the housing market in 2022:

Interest rates:  

The termination of the SDLT holiday did see a slight slump in the buyer market but property remains high in demand, because of the low interest rates.  However, with inflation, it looks likely that interest rates will rise in the coming year. 

As a result, mortgage rates will have to rise as well.   Even though the rise may be slight, since mortgage amounts are usually large, even a small rise in rate will impact the borrower.  

If it is a fixed rate mortgage, the borrower can breathe a sigh of relief for the time being.  However, for new prospective buyers, the rise in interest rates will be daunting and may be one of the challenges that the housing market will face.


This could be a problem since the furlough scheme has ended and people are having to live on decreased incomes.  The unemployment rate is also high.  The government’s Help to Buy scheme valid till March 2023 for new buyers has some restrictions and with the decline in income, some are now not able to afford to take advantage of this grant.

Economy and cost of living: 

● Inflation is rising and the prices of essentials are also surging.  Coupled with the high cost of living, the rise in National Health Service tax and the cutting out of universal credit for poorer families is making it more difficult for people to save enough for mortgage deposits. 

● The production side of the economy has also been hit.  Labour and material shortages, with the high increase in material prices, has caused the supply of new houses and housebuilding input to decline.  With the demand still high, the lack in supply is another challenge for the housing market.

Housing equity: 

The difference between the appraised value of a property and the outstanding mortgage is the equity.  This should rise as regular mortgage payments are made. 

However, if mortgage rates rise and lenders become more particular about loans, it could tell on the demand for property purchases, which could drop from the current high.  This drop will reflect on property prices as well and should they reduce, the housing equity will decrease as well.


The future of the housing market cannot be predicted with certainty.  Taking the pros into consideration, as long as the demand for housing rises and exceeds the supply, the property market will continue to do well.  

With the cons explained above, the market will certainly face challenges.  However, this particular sector of the economy has withstood the storms of the past, has overcome the difficulties of the present and will probably continue to stand resilient in the future as well.


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