5th January 2022
What can the past 18 months tell us about the future of property? As we make our market predictions for 2022, is it a good time for you to invest?
The UK housing market continues to change. Whether it’s buying or renting, people’s property needs pre and post lockdown have shifted. In this article, our team of local experts looks at previous market trends and current behaviours and shares their insights as we look ahead to 2022.
Profitable prospects for landlords
A common thread during lockdown saw a decline in the need to live centrally in cities. Instead, people were able to work remotely, often from cheaper, rural areas. With lower rents outside London, people could now get more value for their money. Zoopla’s report confirmed this: 'UK rental growth outside London hits 13-year high,’ while ‘average rents across the UK outside London rose by 5%’*.
This was great news, particularly for our local landlords, who saw a huge 12% increase of rents over summer. Whereas, it’s no surprise that London saw a reduced annual change of 1.6% in Q3 2021*.
High demand means slim pickings for renters
The total UK rental stock remains low, with reports of it being ‘43% below the five-year average, putting upward pressure on rents’*. Although not ideal for renters, this sustained competitive market has (and continues to be) advantageous for local landlords: sudden demand for rented properties meant that locally, on average, it took us just nine days to secure a tenant. This is quicker than the national average of 15 days*. As demand has continued to outstrip supply since July, we expect monthly rents to increase further into 2022.
These are the current average rental prices: 1-bed £779pcm; 2-bed £965pcm; 3-bed £1,356pcm. Our forecast for 2022 is that prices will continue to climb incrementally, even as people head back to the office. With inflation surging to a 10-year high and rental prices set to rise, will people be able to afford the increase? Zoopla’s report confirms that, despite the pandemic, the job market is thriving: ’The number of job vacancies is at a record high. This signals continued strong demand for rental property moving into 2022’*.
Our expert advice for local landlords
1. We expect that rents will continue to climb, so review your properties as early as possible to fix mortgage rates and rents.
2. Consider re-financing while money is cheap to borrow. This could release equity to buy another property, or for you to invest in updating your current ones.
3. If you’re seeking a buy-to-let, now could be a good time, as capital growth is anticipated.
The future is bright for sellers
In the past 12-18 months we’ve seen a change in people’s lifestyle, and therefore in their motivation to buy. Thanks to the stamp duty holiday and lower mortgage rates, there was a surge in housing transactions. It was a big year for sales across the UK: £473bn of new sales agreed in 2021, £95bn higher than 2020**.
Buyers want to upgrade
Going into 2022 we expect some buyers will still be working remotely and looking for office space in their next home. With the possibility of another lockdown, buyers will be looking for the option of outside space. Some new buyers will have had greater opportunities to save during lockdown; with this extra cash they want to upgrade on space with their next purchase.
Sales are up, but is that all about to change?
There’s still a positive outlook, but we do predict fewer transactions over the next few months. The reason might come down to a lack of stock, the reintroduction of stamp duty and higher mortgage rates.
On a national scale, external factors may include: increased living costs, inflation and tax. Despite these considerations, Zoopla predicts that average house prices will increase by 3%**.
Advice for local sellers, straight from the experts
1. Don’t be tempted to rush into putting your property on the market. Carefully consider your listing and pricing to ensure elevated exposure to the right buyers.
2. Presentation is key. With added costs such as the reintroduction of stamp duty, buyers won’t want to spend extra on repairing or updating fixtures and fittings.
3. Can you make the property more energy efficient? Consider things like a new boiler or electric car charging point, to add value and desirability to your property.
Our predictions for 2022
We estimate that the average house price will increase from £323k to £340k in 2022. The greatest growth will be found in 3-4 bedroom houses, as these are in high demand. Overall, we should see a 5% increase in house prices in the local area.
As we start a promising new year, please don’t hesitate to seek advice from your local team. We look forward to helping you prosper in 2022.
*statistics taken from Zoopla UK rental market report Q3 2021
**statistics taken from Zoopla UK house price index report October 2021