What Does 2022 Have In Store for the UK Property Market?

House Prices 2022Let’s face it: making predictions in the past couple of years has been a fool’s errand.

Nobody could have truly predicted the events that would unfold in the early going of 2020, and in hindsight 2021 was – in many ways – simply a continuation of that.

But what of 2022? Well, again, making any grand statements as to what may or may not happen should be avoided – nobody really knows how well the world will heal itself.

As far as the UK housing market is concerned, there are those who have stuck their head over the parapet to predict that property owners are in for a steadier and less profitable time, while prospective buyers with a handy deposit to hand might just be in an advantageous position.

A Record-Breaking Year

Like a successful musician making that difficult second album, the UK property market has plenty to live up to.

That’s because 2021 broke all manner of records, with nearly 1.5 million transactions taking place in the domestic housing market – the ‘busiest’ it has been since, gulp, the financial crisis of 2007-08. That equates to almost one in sixteen of all UK properties being sold.

That trend led to two others as well: UK banks lent more money in mortgages than ever before – an estimated £316 billion, to be exact, while as demand increase so too does price: the average UK home is now worth an approximate £272,9992….an increase of around £20,000 on the 2020 figure.

There were a number of drivers, including the holiday on stamp duty payments and a so-called ‘race for space’ as many left the big cities for more rural abodes, and all things considered 2021 was a fantastic year to be an estate agent.

But will 2022 follow suit?

Back to Normality?

It seems almost a certainty that there will be no repeat of the stamp duty holiday in 2022 – the fuel that triggered the property kaboom last year.

And there could be a more comprehensive ‘return to work’ mandate rolled out if all things pandemic are brought under closer control – that would slow the pace of those escaping the big smoke for leafier surroundings.

One of the other factors that could dampen spirits in the UK property sector is inflation. As the cost of living soars, potential homebuyers have less cash on their hip – that could cool their desire to move up the property ladder, and ensure they are unable to afford the renovation work that might be required to get their present home into a ‘sellable’ condition.

Another issue could be a scarcity of supply. The industry body Propertymark revealed that, as of November 2021, the average estate agency had just 20 properties for sale on their books – the lowest number for more than 20 years.

With demand lower due to economic factors, but with supply low, it’s unlikely that the property market will see an overwhelming slashing of prices – good news for homeowners looking to ride out 2022 and consider their options next year, but less so for those looking to strike a deal in the immediate future.

Tim Bannister, the director of data at Rightmove, believes that 2022 will see a return to ‘normal’ for the property sector. “It’s been a frenzied property market over the last 18 months, with changed housing needs driven by the pandemic inspiring many moves and lifestyle changes.

“However, while the pandemic is still having an ever-changing impact on society, we expect a housing market moving closer to normal during the course of 2022.”

First Time Buyer Blues

The general consensus is that the state of the UK property market is not particularly helpful for first time buyers.

Interest rates were increased in December, and that – quite simply – will make it more expensive to buy a new home.

With cost of living increases, and many sectors still affected by Covid woes, those yet to climb onto the property ladder are facing extremely tough conditions.

But there could be better news on the horizon. There has been an increase in the number of lenders offering mortgages to those with just a 10% deposit, and that will enable those unable to save thousands to still acquire the keys to their first home – even amid the trend for property price rises.

And there has been an uptick in lenders willing to offer mortgages above and beyond the standard 4.5x your salary. Loan to income mortgages of up to 5.5x are becoming increasingly commonplace, and one firm – Habito – is even offering a mortgage deal of seven times your personal or combined salaries with a partner.