According to the experts, the UK housing market has been quite busy with a purchase of over 1.5 million houses in 2021, the highest number recorded since the financial crash of 2007. Flexible working conditions, a change in buyer preference and the rising demand for properties in the suburbs certainly led to the increase in potential buyers who were looking to relocate. With new Covid-19 variants almost every year, an expected increase in the rate of inflation and the constant imbalance between the supply and demand in the housing market, predicting the future of the UK property market with any degree of uncertainty is almost impossible. However, experts do believe that the average house growth will continue to rise in 2022, but at a relatively moderate rate. Whether you are a potential buyer, a seller, a real estate investor or a tenant, here are the 4 things that you need to keep your eye on in the UK property market in 2022.
1. Focus on the market trends
2021 was certainly a very frantic year for the housing market. Almost a third of the houses that were sold in the UK in 2021 were sold much higher than the asking price, hence proving how ‘frantic’ the market really was. However, with the new Omicron variant coupled with the ever-evolving change in buyer preferences, estate agents in Sittingbourne recommend that you keep an eye out on the market trends. Most experts believe that the market trends can change quite quickly, with the unexpected rise and falls in the average price of property. According to Zoopla, the average price of property will increase by 3 per cent in the UK by the end of 2022; North West England and East Midlands are expected to see the highest house growth rate this year. As per Savills, the UK property market will see an average growth rate of 3.5 per cent 2022.
2. Rental prices will continue to rise
As per the English Housing Survey, one out of every five households is residing in private rental properties in the UK. Owning a house in this day and age is no cheap endeavour; it requires painstaking financial planning and finding the right property at the right price is of utmost importance. As prices continue to increase, so will the rentals. For property investors and landlords, this could be a great year to increase their property portfolios. According to some experts, the UK will have a whopping 55 per cent of the population living in rental accommodations by 2045. However, with a rising change in tenant demands and the increase in the number of rental properties in the market, landlords need to ensure that their rental property stands out from the rest.
3. Interest rates will increase
As the average price of property in the UK continues to rise, buying a home has become more and more difficult for first-time buyers. To boost the buyer’s confidence and to allow first-time buyers to climb the property ladder, the government has introduced many homeownership schemes such as Help to Buy, the mortgage guarantee scheme and the First Homes scheme. The government also reduced the rate of interest on mortgages. In 2021, there was an abundance of low-deposit mortgages, with deposits as low as 5 per cent. However, as the cost of living will increase, and the economy will start to thrive, the government will be forced to start increasing the rate of interest. While the increase might be slow and staggered, it will certainly increase in the long run, which could impact lower-income groups.
4. Average price of property will continue to increase
Most experts can conclude that the average price of property will continue to rise in 2022. While some experts believe that the end of the stamp duty holiday coupled with the increase in the supply of residential properties at the beginning of the year will slow down the rate of price growth, others believe that 2022 will be no different from 2021 when it comes to the increase in the price of property. However, almost all the experts can agree on the fact that the house prices will remain strong in 2022. Essentially, the imbalance between demand and supply is a contributing factor to this significant price rise. Along with that, the change in buyer demand, where potential buyers and homeowners are looking for bigger properties with outdoor spaces, coupled with the increase in the price of resources such as labour, raw material and manufacturing costs due to Covid-19 is another reason for the rise in property prices.