What will the property market look like in 2022?
To say that 2020/21 has been a ‘volatile’ year for the housing industry is perhaps understating it a bit. One of the most tumultuous years in living memory has touched every part of our society, including the housing market and the construction industries.
One of the biggest factors in the unprecedented demand on the UK’s housing stock through the Pandemic has been the relaxation of stamp duty. It meant potential savings of up to £15,000 on a £500,000 property, encouraging more people to make the most of this ‘stamp duty holiday’ and rush to buy before the deadline brought things back to normal in October 2021.
Higher demand led to higher prices, and as property values rarely goes down once they’ve gone up, that means 2022 could be a much more expensive year for potential buyers. The trouble is that now, the benefits of the stamp duty holiday are no longer in place. That financial cushion has been removed, meaning that buyers in 2022 are going to have to have deeper pockets than last year. With the average house price at an all-time high of £262,954 (according to the Halifax Building Society), and a 0.7% increase in July/August 2021, buying your first (or indeed your next) home just got more expensive.
2022 – a slower year? Probably not…
Predictions are notoriously difficult to get right, but the property sector is perhaps a little easier to second-guess, even in such uncertain times. The consensus is that house price inflation will slow next year, so while those averages are still set to climb, the ascent won’t be as rapid as it has been over the past 18 months. Demand is still outstripping supply, though, and even the relaxation of the planning regulations hasn’t yet filtered through to the building industry. There are still more buyers than there are sellers.
What market analysts are predicting, however, is that even though the stamp duty holiday has come to an end, there will still be plenty of potential buyers with money in their pockets. Much of that is money that would’ve been spent on commuter costs and is now sitting in savings accounts as a result of the working-from-home revolution. The amount of disposable income within society (and particularly among the more affluent middle classes) is surprisingly high.
Another driving factor is the demand for outdoor spaces. With more people finding city life both restrictive and, in an age of remote working and faster broadband, increasingly unnecessary, the demand for rural properties has also hit an all-time high. The exodus from the cities and in particular London has caused a surge in property prices in rural locations, especially the south, north-west, south-west, and Wales.
The Buy-to-let revival
Another big trend for the coming year will be buy-to-let. The private rental market has never been in such high demand. Young professionals who want to move out of the family home but cannot yet afford even a 5% deposit on a place of their own are desperate for affordable rentals, as are key workers and locals in more rural areas. Competition is fierce and is being fuelled by a shift in the population. For property investors, buy-to-let represents a viable option and provides stable, long-term income.
So there are some reasonably easy guestimates to be made when it comes to the property market, but if Covid-19 has taught us anything, it’s that life is far from predictable. The introduction of the Mortgage Guarantee system to help make it easier for people to get a mortgage with just a 5% deposit may cushion some of the fallout from the end of the stamp duty holiday. The same holds for the Help To Buy: Equity Loan scheme – part of the government’s plan to keep the housing market momentum moving. But will it work? Is 2022 set to be a record year for the property industry?
A boom year ahead?
Industry experts such as Hamptons predict a buoyant year with price growth in the housing sector of 3.5% in 2022, with similar increases year on year through to 2024, delivering a rise in prices of 13.5% between the start of 2021 and the end of 2024. For a country only just coming out of the worst economic crisis in living memory, that’s quite an achievement.
If you’re planning to take advantage of that 5% deposit scheme to secure a mortgage, it’s best to talk to a property expert first before you commit. Contact us today and talk to one of our property conveyancing professionals for impartial, no-nonsense advice.< < back to latest news
Terry Jones Solicitors is a trading style of MLL Ltd. Registered as a limited company in England and Wales, registration number 05907992. Company registered address is at Sale Point, 126-150 Washway Road, Sale, Manchester, M33 6AG. Authorised and regulated by the Solicitors Regulation Authority (SRA ID 446632). VAT registration number 742326449.
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