Well, 2022 should in theory be easier to predict than 2020 and 2021… so fingers crossed!
A quick recap on 2021
2021 was an extraordinary year for the property market. Activity from excited homebuyers resulted in prices across the country recording astronomical highs.
The industry was given a boost by The Chancellor of the Exchequer, who declared a holiday to the country-wide Stamp Duty Land Tax. This genius boost to the Property Sector ensured that 1.5m homes were purchased across the UK in 2021, the highest number since the global financial crisis back in 2008.
A huge surge in demand from both first-time buyers and those well acquainted with the industry guaranteed that asking prices kept rising throughout the worst of the pandemic. The average property in the UK reached an all-time high of £276,000 and 12 months-worth on transactions were pretty much crammed into the first 6 months of the year.
£316bn of home loans were given. James Tatch, Head of Data and Research at trade association brand, UK Finance, suggests that we witnessed the greatest year for mortgage lending since 2007. He went on to state that “We’re seeing a return to a stable path for new lending”
Whilst access to green spaces and flexible working hours prompted many to relocate away from major Cities, overall 2021 was about as good as it could be for the Property Sector.
Key factors that will likely have an impact on the year ahead
Back in mid-December, The Bank of England made the decision to raise the base rate in the United Kingdom from 0.1 per cent to 0.25 per cent. Whilst it is true that those with fixed-rate deals will be protected until their initial fixed period ends, those with variable-rate mortgages will notice a relatively small increase to their monthly payments.
Despite the pandemic-led exodus of the UK’s larger cities, we are seeing a continued, strong demand to purchase a home from both domestic buyers and overseas investors. However, we feel that low stock availability in some areas of London and other parts of the country will mean that UK transactions levels for this year will very likely be less than 2021. Many analysts predict somewhere in the region of 1.2 to 1.3 million property sales in 2022, down from the 1.5 million of last year.
Confirming our thoughts, Rightmove’s very own Director of Property Data, Tim Bannister, has mentioned that “a closer-to-normal market means a slowing in the pace of price rises, and a better balance of supply and demand for homes.
Propertymark’s Chief Executive, Nathan Emerson, said to The Guardian at the start of the year “Agents are not seeing any signs that demand will slow in 2022. There are simply not enough properties to satisfy demand. The question then remains, how does the market encourage new stock?” https://www.theguardian.com/money/2022/jan/03/uk-housing-market-expected-to-stabilise-in-2022-after-bumper-year
So, what next for London?
As the London workplace returns to ‘normality,’ early indicators are very positive for the Sales market in London. Boroughs such as Hackney and Newham continue to be in very high demand and we can see no reason to think that it will be anything but another strong year for property transactions in London.
In terms of the London Rental market, there is every expectation that the year will continue as last year ended; ever-increasing demand and gradually rising rents.
As more London workers return to their place of work and COVID concerns continue to diminish, the demand for rental property in many parts of London is bound to outweigh the supply. There is very limited buy-to-let property stock coming available, which is an ever-increasing issue in London…