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Strength to persist into 2022

The continued strength of the housing market after the end of the stamp duty holiday shows that it was far more than the tax break that kept prices surging in 2021. The three key drivers of demand - low mortgage rates, high household saving, and a reassessment of housing need given remote working - all remain in place. As a result, there has been no decline in appetite to move house as indicated by very high web search activity for homes for sale. But with stock limited, that is more likely to translate into higher prices than a boom in transactions. That’s why we expect house prices to increase by a further 5% in 2022, more than most other forecasters expect. This will be the final UK Housing publication of the year. Capital Economics’ London office will be closed after 24th December and will reopen on 4th January, when we look forward to being back in your inbox. In the meantime, we’d like to wish all our readers a Merry Christmas and a Happy New Year.

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