A frenetic year is drawing to a close. 2021 will probably go down in conveyancing history (if such a thing exists) as the year the housing market outperformed all expectations. We’ve seen record highs for mortgage lending, property transactions, and house prices. And, even after the end of the stamp duty holiday, the market has remained relatively buoyant.
So, what can we expect from 2022? What will happen to house prices? And will this be the year normality returns?
The return of normality?
Let’s deal with the thorniest question first. After a frankly bananas eighteen months, is the property market beginning to return to something a bit more like normality?
Well, according to Rightmove, the signs are good. The property website has claimed the market is heading for a “less frenetic” period. The market will remain busy, with strong buyer demand continuing, but the picture should become a little more balanced as more homes are put up for sale and higher interest rates cool buyer demand a little.
One apparent sign of this happening is the return to the traditional ‘December dip’ in both transactions and asking prices. The average asking price has dropped by 0.7% over the last month, which is much more in-line with what we’d expect to see in the run up to Christmas.
Of course, there’s a big Omnicron-sized caveat to all of this. We don’t yet know how the latest wave of the pandemic is going to play out or whether further restrictions will be needed. But, it’s to be hoped that the vaccines do their job and most elements of the market can continue as usual.
The Build-to-rent Boom to Continue
We don’t usually cover rental property on this blog, for obvious reasons. However, there’s a element of the rental sector that affects conveyancers everywhere – build-to-rent.
Build-to-rent developments are, as the name suggests, new builds designed specifically for renting. They typically come with a range of perks beyond your average rental, such as longer tenancies, on-site managers, and purpose built communal spaces.
The market in the UK is relatively small compared to the US at the moment but that’s changing, fast. There are an estimated 140,000 homes in production right now and more than 80% of them are in cities earmarked by the goverment for housing stock growth.
As many of us rent for longer into our lives and the affordable housing shortage continues, expect to see more developers shift focus to this lucrative market in 2022.
UK House Prices Continue to Climb
2021 was a spectacular year for house price growth and many commentators are predicting more of the same, albeit at a slower rate. Leaders Romans Group believes prices with continue to grow throughout 2022, with a 3% rise over the year. Meanwhile, Rightmove predicts that growth will continue at the steady rates we’re seeing in the last two months of the year.
As always, location is key to understanding where we’ll see the highest growth. Essex, Norfolk and parts of the North West are among the areas tipped to see spikes. All of these locations offer relatively cheap prices for larger family homes, making them an enticing prospect for anyone looking for more space post lockdown.
Could Energy Performance Become an Important Purchase Incentive?
Climate change has been one of the most important issues facing humanity for some time. However, it’s only in the last couple of years that it’s risen so high on the agenda for governments and citizens alike.
There are whispers about government legislation to impose targets on homeowners to improve the energy performance of their homes as well as greater general awareness about climate change. So, could 2022 be the year that energy performance becomes a much more important factor in buyers’ decision to purchase?
So there you have it. PIC’s (possibly foolish) predictions for 2022. If 2021 was anything to go by, we should have learned the futility of these sorts of predictions. But, we’re hopeful about the year ahead. All that remains is to wish a very Merry Christmas and a Happy New Year to all of our customers, partners, and readers of this blog. We look forward to working with you in 2022.