Predictions and Prospects for 2022
From Michael Day of Integra Property Services
Michael Day appears regularly in the national and trade press, also industry webinars and seminars. His opinions and forecasts are highly respected within the world of property matters and we suggest his latest communique is well worthy of serious consideration by anyone interested in how the market may perform in the year ahead. He wrote last week:
I look forward to 2022 and a year of less extremes and steadier markets going forward. The press are, as always at this time of year, full of predictions for the property market and the main property websites are no exception to raising their heads above the speculative parapet.
Rightmove predict an overall increase in house prices across the UK of around 5%. Zoopla make a prediction of a 3% increase. This follows their view that there was a 7.1% increase in UK house prices in 2021.
UK house prices rose strongly throughout this year, increasing by 5.6% in the first six months and driven by elevated levels of demand. It is expected that in 2021, the UK will have seen prices rise by a total of 9.0%. Mortgage lender Halifax have announced an overall 8% increase and the Nationwide 10%. Rates of increase were however variable by region with London generally seeing the lowest rates of increase across the UK.
Savills believe that while transactions and thus price growth will continue into 2022 - it will be tempered by the exceptional growth we’ve seen this year, especially if interest rates start to rise sooner than expected. They predict a 3-5% increase overall. This will lead to a ‘soft landing’ rather than a dramatic price correction over a short period of time.
The Royal Institute of Chartered surveyors predicts that house prices could end next year 3-5% higher than at the start of the year stating: “2021 has been an exceptionally active year for the housing market, with transactions close to record levels. However, despite more homeowners seeking more space and various incentive programmes … transaction activity for the coming 12 months will inevitably slow.”
They continued, “All else being equal, higher borrowing costs will dampen demand across the market to a certain extent. The major challenge will be around the lack of stock on the market with inventory back close to historic lows and shows little sign of easing.”
The Halifax expects price growth to slow considerably as a result of rising living costs. It forecast price growth of zero to 2% in 2022.
There is no doubt that demand from buyers for UK property continues to rise while supply has, since the end of the stamp duty holiday, hit an all-time low. Sales agreed year-on-year rose by over 30% across the UK, while exchanges also increased by 55% – a clear signpost of how quickly demand is outstripping supply. According to TwentyCi, estate agent listings have now decreased by 50% to normal levels, while 530 UK districts have housing stock levels below two-month targets.
Economic recovery and confidence around coronavirus and employment will be key, as are interest rates. It looks likely that, despite some bumps in the road in terms of coronavirus, economic recovery will remain reasonably strong with employment levels likewise. Interest rates look set to rise but increases are likely to be small and spread out so as not to halt recovery.
My prognosis is simple, if an individual wants or needs to move and can do so, then they should. Property values will largely hold or grow in line with inflation and, certainly in the owner occupier market, most people stay in a property for many years and so, over the lifetime of ownership, there will be periods where values rise or possibly fall and interest rates go up or down. History however shows that over any reasonable period of time, values have grown and this looks likely to continue. The same is true of the rental market where rental values tend to move in line with demand.