By Legal Futures Associate Thames Water Property Searches
As an unprecedented year draws to a close, with the highest annual volume of sales and purchases since 2007, conveyancers and other property professionals may be breathing a sigh of relief and looking forward to a well-earned rest.
But what will the property market look like in 2022? With the threat of Omicron looming, and the first interest rate rise in three years thanks to soaring inflation, there are lots of factors at play.
In spite of these challenges, we head into the new year with a robust housing market – according to Halifax, UK house prices rose by 3.4 per cent in the three months to the end of November 2021, the highest quarterly rate since 2006.
Predictions for the next 12 months vary depending on who you talk to, but there appears to be a broad consensus that while the market will remain busy it probably won’t be quite as hectic as it has been over the last 18 months.
Online portal Right Move forecasts prices to rise by a further five per cent in 2022 but says that stretched buyer affordability and an increase in housing stock will take the heat out of the market.
It points to evidence of a traditional December dip – with the average asking price of a home falling by 0.7 per cent – as a key indicator that the market is already returning to more typical conditions.
Others are more cautious in their predictions – estate agents Savills forecasts rises of 3.5 per cent over 2022, online portal Zoopla 3 per cent, while a fall of 1.4 per cent was predicted by Oxford Economics. The average (median) prediction is of 1.4 per cent growth in 2022, according to the Treasury.
The Bank of England interest rate rise of 0.25 per cent is likely to further slow the pace of sales and attendant price rises, because of the squeeze on spending power. It will have a knock-on effect on mortgage rates which have been so historically low for so long. The increase to 0.25% from 0.1% may have come earlier than initially expected but is not altogether surprising, with experts predicting rates will continue to rise through 2022.
There are, of course, regional variations with many predicting the gap between property prices in the north and south to shrink over time. Zoopla predicts the biggest price hikes next year will be in the North West where house prices are increasing exponentially – places like Blackburn and Rochdale are expected to rise by 10 per cent. While London will see much slower growth of around two per cent.
One thing the experts do agree on is that we’re likely to see a continued desire from people to change where they live – the pandemic continues to prompt many to re-evaluate what they want from their homes in the wake of the new style of hybrid working.
And it seems that many have made a New Year’s Resolution to up sticks. According to a Zoopla survey, 22 per cent of households remain eager to move in the next 18 months as a direct result of pandemic. The latest Right Move data backs this up – it shows that valuation requests from homeowners to estate agents are 19 per cent up on this time a year ago.
The Government’s new version of the Help to Buy equity loan scheme, for the moment expected to run until March 2023, will also continue to prop up the market by giving first-time buyers struggling to get on the property ladder a 5 per cent deposit.
No one has a crystal ball and only time will tell, but one thing for certain is that conveyancers and other property professionals will still have their hands full come 2022. Rest assured that Thames Water Property Searches will be here to help all our customers get through the next 12 months – whatever they may bring.