Average residential property prices in England and Wales are set to increase in the first two months of 2022 based on deals agreed in October and November, according to the latest reallymoving house price forecast.

Heading towards the New Year the market is facing a number of threats including the rapidly Omicron variant, rising inflation and the recent announcement of a 0.25% rise in interest rates, which combined are likely to impact buyer demand and dampen price growth in the months that follow, yet the market remains fundamentally robust with the pandemic-driven race for space continuing to play out.

Reallymoving captures the purchase price buyers have agreed to pay when they search for conveyancing quotes through the comparison site, typically 12 weeks before they complete. This enables reallymoving to provide a three-month house price forecast that historically has closely tracked the Land Registry’s Price Paid data, published retrospectively.

Average prices will fall by 1.1% in December as a result of deals agreed between buyers and sellers in the early autumn, when the impact of the stamp duty holiday subsided and demand fell back to be more normal levels leading sellers to price more competitively. But once again, most likely as a result of a severe shortage of new stock coming to market, the prices agreed between buyers and sellers began to rise in October and November which will be reflected in an increase of 2.5% in January, slowing to 0.2% in February 2022 when the average completed sale price will be £342,900.

Annual house price growth looks set to remain unchanged in December, before increasing by 2.1% in January 2022 and 1% in February.

Rob Houghton, CEO of reallymoving, commented: “House price growth in the New Year is inevitable based on transactions already underway, following a strong market performance in the autumn when a lack of stock and continued high levels of buyer demand helped support prices.

“As we head towards Christmas there are a number of headwinds with the potential to impact buyer sentiment, not least the spread of Omicron which brings renewed uncertainty and concern over jobs, inflation and economic growth.

“Although interest rates remain very low, the first rise feels significant and shows that despite the escalating Covid-19 situation, the Bank of England won’t wait to tackle rising inflation. Rising borrowing costs will impact the affordability of first-time buyers coming to market and those in a position to buy soon may be more tempted to press ahead and secure a fixed rate deal as quickly as possible.”