By Legal Futures Associate tmgroup 
Ahead of the final tm:tv session of 2021, “How can we balance supply and demand?” at 12 noon on Thursday 25 November , panellists Martin McCreath, Regional Managing Director at Your Move and Reeds Rains, Greg Cunnington, Director of Lender Relationships and New Homes at Alexander Hall, and Daniel Morgan, Commercial Manager at Rightmove share a sneak peek into what they think will influence supply and demand in 2022.
High demand will still be driven by the people who have re-evaluated their housing needs and feel confident to stretch themselves to move up the property ladder
“It has been well documented that the housing market has had one of its busiest 12 month periods on record. Latest forecasts predict there will be in the region of 1.4 – 1.5 million transactions this year. So, what is the outlook for 2022?
Homeowners have re-evaluated what is important to them in their housing needs during the most recent 18 months – in part due to numerous lockdowns and therefore spending far more time at home. In addition, as our working patterns have changed with considerably more people switching to working from home, the need for more space to accommodate an office / study has become more important.
Let’s also remember that whilst there is speculation that the Bank of England will increase the base rate over coming months, for now, the cost of mortgage lending is still at record low levels. As such, many people have felt confident enough to stretch themselves and take on a bigger loan to allow them to move up the ladder. House price inflation running at approx. 6% YOY has also allowed homeowners to realise equity and move up the ladder.
Whilst all of the above points are perceived as positives, we need to remember that there could be economic head winds ahead, which, combined with the prospect of higher mortgage rates and the concern around further government restrictions needed to fight the Covid pandemic do all lead to a more uncertain outlook for the year ahead.
For now, I believe there will still be a high level of demand for housing over the next 12 months, however, I would be surprised if transactions and house price inflation continue at the levels we’ve seen during 2021.”
With thanks to Martin McCreath, Regional Managing Director at Your Move and Reeds Rains
Increased competition will lead to enhanced criteria from mortgage lenders
“One thing that will have a positive influence on supply / demand for 2022 will be enhanced criteria from mortgage lenders, born out of the increased competition in this space.
As mortgage lenders realise there is less margin to be made in competing on rate, we will see them look to use criteria improvements as a means to generate increased application volumes. We have seen some very positive criteria improvements in recent weeks, including three major lenders now lending to 5.5x income to higher earner clients, and another lender increasing the percentage of bonus income they will take into consideration, as an example. I expect these improvements to continue into 2022, meaning better mortgage options for more clients to boost their purchase potential.
This does not mean we should be worried about increasing mortgage rates. Although we have seen mortgage rates rise from their record lows in recent weeks, they remain very competitive, and with the fierce competition in the lender market, even if interest rates do rise due to inflationary pressures, mortgage rates should remain at very low levels by any historical standards.”
With thanks to Greg Cunnington, Director of Lender Relationships and New Homes at Alexander Hall
There will be demand for homes closer to the city as businesses solidify their long-term plans for balancing home and office working
“This year in the property market, there’s been no getting away from the imbalance between supply and demand for homes. We’re still seeing really high levels of demand to move, and a strong pipeline of sales aiming to complete in the first half of 2022, so it’s likely this imbalance is set to continue to some degree next year.
One thing we’ve been seeing is a return of activity in cities over the last couple of months, particularly as more workers have headed back to offices at least part of the week. We’ve seen increased interest in homes near commuter stations into major cities. Further demand for homes closer to the city is something we expect to see heading into next year, particularly as businesses solidify their long-term plans for balancing home and office working.
This quarter, we saw a number of city centres hit double digit growth in rents after a year of falls, further evidence of cities beginning their recovery, as more tenants headed back as restrictions eased, and the things that make cities special opened back up again.
An aspect of the market that could potentially feel the pinch between supply and demand next year is one and two bed properties, where competition between buyers for the properties available is around 50% higher than a year ago.”
With thanks to Daniel Morgan, Commercial Manager at Rightmove
Want to learn more about what’s in store for 2022?
Join the last tm:tv session of the year “How can we balance supply and demand?” at 12 noon on Thursday 25 November. Click here to register.