How will these house price increases affect the housing market this year?
Most homeowners have experienced a lift in equity, which could encourage some people who have been undecided about moving to finally take the plunge. The increase in house prices will most likely underpin a lot of the activity this year, and we expect to see a lot more sellers come to market over the next few weeks.
On the other side of the coin is the fact that increased prices can also make it more challenging for buyers, although this will be dependent on where they are located, and the type of property they are purchasing. The increased price of property could also make it difficult for sellers to find a property to move to, but that’s where a good agent can be valuable.
The post-Christmas and early 2022 property bounce
As predicted, we saw a huge uplift in searches for properties following the festive period. Rightmove and Zoopla reported record highs in search volume and we are anticipating that more demand will also be fuelled by the continued ‘reassessment of home’. Many households are taking the next step up the housing ladder, and coming to market to upsize, or purchase more space.
Are buyers likely to have more property choice than in 2021?
A huge factor in the lack of choice was the lack of sellers coming to market last year as well as the speed at which the market was moving. According to Zoopla, the average time between listing a property and agreeing a sale subject to contract was 50 days in the years before the pandemic. In 2021, it has been consistently below 30 days. As the market starts to move at a more normal pace, it will be an opportunity for supply pipelines to repair, which is great news for house hunters, although some say it could put downward pressure on house price growth.
What’s happening in the rental market?
Similar to the shortage of stock in the sales market, the lettings market has also been faced with a shortage of properties to let. We anticipate that this will ease this year. Last year, many landlords capitalised on the staycation boom by turning their long-term rentals into short-lets. With holidays abroad now becoming a reality again, the staycation boom could subside and landlords will turn their attention back to long-term rentals. More stock in the market means good news for tenants, but the stock imbalance will continue to fuel rental growth throughout 2022. There was also a swing back to city centres, including London, at the end of last year, which marks good news for landlords in these areas.
What’s the forecast for 2022?
The Bank of England has so far increased the base rate from 0.1% to 0.25%, which is the first interest rate rise in three years. Most households who already have a home loan will be sheltered from this rise as many mortgage deals are on fixed-rate terms. However, those hoping to buy a home in 2022 may find that rates have risen slightly compared to 2021. Overall, even with another interest rate rise, mortgage rates will remain relatively low with good mortgage deals available.
In terms of house prices, the strong buyer demand, coupled with lower stock volumes, will continue to play a key part in the price of property. We expect house price growth to continue, though perhaps not as rapidly as in 2021. Rising household equity, coupled with the search for space, will underpin all activity this year. We’re currently still seeing a continued surge in the volume of new buyers looking to purchase the limited housing stock available, and so we would encourage anyone thinking of selling to take advantage of this key window of opportunity, now.