House price growth to cool but not collapse

There are already signs that the end of the stamp duty holiday will take some heat out of the housing market, with house price inflation set to cool from 10% to 7% by the end of the year. But as we think that the tax break was just one of several factors behind the current boom, we expect house price inflation to cool rather than collapse. Remarkably limited damage to the labour market from the recession, and low and declining mortgage rates mean that house prices are likely to rise by about 3% y/y in both 2022 and 2023, stronger than expected by the consensus.