House prices rise 10pc but market ‘close’ to pre-crash levels

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Mr Gardner warned there could be trouble ahead for the market. It was unclear what effect the omicron variant would have on the market and consumer confidence was “well below” the levels seen in the summer, partly as a result of a sharp increase in the cost of living, he said.

Rising interest rates may also exert a “cooling influence” on the market. If the Bank of England puts up Bank Rate in response to rising inflation, this would push up mortgage rates and make it more difficult for borrowers to qualify for loans.

Mark Harris, of mortgage broker SPF Private Clients, said: “The noise around interest rate rises is likely to get louder as we head into the new year but for now it’s a mixed bag when it comes to mortgage pricing, with the cost of mortgages for those with more than a 20pc deposit still rising while mortgages for those with smaller deposits are seeing some reductions.”

Other figures released by property website Rightmove showed the market was on track for its busiest year since the financial crisis and ruthless bidding wars had inflated property prices to record heights. 

However, it said property prices would continue to rise in 2022 albeit not at the double-digit pace seen this year. Rightmove predicted a 5pc increase in average asking prices in 2022, thanks to an ongoing shortage of homes for sale. 

Buyer demand was 40pc higher than in November 2019, with the most competitive markets found in Scotland, the West Midlands, the South West and Yorkshire and the Humber.

Capital Economics, a consultancy, has also forecast house price growth of 5pc in 2022. Previously analysts had predictions of price falls, but this changed in the wake of the Bank of England unexpectedly holding interest rates at an all-time low of 0.1pc in November. 

Before the Bank’s Monetary Policy Committee meeting in November, the Centre for Economics and Business Research, another consultancy, had forecast a 2.4pc price drop in 2022. After the rate was held, CEBR revised its prediction and said it expected house prices to grow a modest 0.2pc in 2022, followed by a 1.1pc drop in 2023.

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