The pace of property price growth will slow in 2022 due to 'headwinds' such as higher mortgage rates, soaring living costs and increased taxes, Zoopla's latest house price index has claimed.
The online property portal has predicted that house price growth will run at 3 per cent by December 2022, against a rate of more than 6 per cent now.
It said sellers' 'unrealistic' expectations about what their home was worth could also dampen activity in the market.
Mortgage rates are likely to increase 'modestly' in 2022, ending the year closer to 3 per cent, it said - but it claimed that an increase in mortgage rates would hit sales volumes harder than prices.
Existing borrowers could also be more 'insulated' from higher mortgage rates than they have been in the past, according to Zoopla.
Even if they do go up, the property portal said that competition among lenders would remain intense.
More than 80 per cent of mortgages are on fixed rates, many for five years.
Stress testing has already ensured they can afford mortgage rates of 7 per cent, which is higher than where the mortgage market is heading.
This year, property sales look set to reach record levels and exceed the 1.5millon mark reached in 2007.
Zoopla predicted that £473billion worth of newly agreed sales will have taken place by the end of 2021, which is £95billion more than last year.
It added that while there was 'no sign of any cliff edge in demand' among buyers, activity in the market was on track to run at a less frenetic pace over the coming months.
Zoopla thinks there will be around 1.2million property sales in 2022, 20 per cent less than the 1.5million seen this year. This year's market has been buoyed by cheap mortgage deals, the stamp duty holiday and surging buyer demand for more space.
While a shortage of homes coming up for sale remains a serious problem, demand for homes has been running 30 per cent above the five-year average since summer, Zoopla said. It expects demand to continue running 'strongly' into next year.
'The scarcity of homes is set to continue well into 2022, supporting headline house price inflation', the property portal said.
House price growth is currently running at 6.6 per cent, despite a 'marked regional disparity', ranging from 2.3 per cent in London and 10.4 per cent in Wales.
Above average house price growth is expected to continue in the most affordable markets, where current growth is highest, Zoopla said.
In 2022, house price growth will be highest in the North West of England and the East Midlands, at 4 per cent, and weakest in London, at 2 per cent, according to the data.
Richard Donnell, executive director at Zoopla, said: '2021 is set to be a record year for the housing market with the most moves by homeowners since 2007 and nearly £500billion of home sales.
'The impact of the pandemic on the housing market has further to run but at a less frenetic pace.
'We expect the momentum in the market to outweigh some emerging headwinds from higher living costs and the risk of higher mortgage rates.
'The latest data shows a turning point in the rate of house price growth, which we expect to slow quickly with average UK house prices up 3 per cent by the end of 2022.'
After the first lockdown last year, it was typically wealthier homeowners in high-value homes who opted to move. But, according to Zoopla, this year, mortgage availability improved and more first time buyers returned to the market.
As a results, Zoopla said: 'The mix of movers is now returning to more normal levels. This is resulting in much slower growth in the value of homes where new sales are being agreed, and points to a slowdown in price growth ahead.'
Affordability levels have improved by 10 per cent in London since 2016, but affordability remains well above the long running average. This will continue to limit potential price rises in the highest value areas of London and southern England in 2022 and beyond, Zoopla said.
Official data from the Office for National Statistics last week revealed that property prices have increased by 10.6 per cent to an average of £264,000, which is £25,000 more than this time last year.