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Experts reveal 2022 property market predictions

Robert Payne, , co-founder of Bristol-based Langley House Mortgages.
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With Nationwide’s December House Price Index just out, property experts reveal their 2022 predictions for the UK housing market, including the impact rising interest rates could have on housing stock and where all those Londoners are moving to.

  • Annual house price growth increased to 10.4%, from 10.0% in November
  • 2021 was the strongest calendar year for house price growth since 2006
  • Price of a typical UK home hit record high of £254,822, up nearly £24,000 over the year
  • Wales was the strongest performing region in 2021, London the weakest

Despite maintaining a blistering pace for most of the year, and in the face of the Omicron variant, price growth still managed a sprint finish in 2021, according to Jonathan Hopper, CEO of Garrington Property Finders.

“December’s increase means the annual rate of price growth has been in double figures in seven out of the 12 months of the year. Consistently rising prices mean that over the year the average UK home earned its owner more than £23,000.

But despite the seeming continuity on price inflation, Hopper said that market dynamics are shifting.

Jonathan Hopper, CEO of Garrington Property Finders

“With the Stamp Duty holiday now long gone, this is no longer a free-flowing, boom market. Instead, prices are being driven up by chronically short supply and seller hesitancy,” he said.

Robert Gardner, Nationwide’s Chief Economist, said that annual house price growth remained in double digits in December at 10.4%, making 2021 the strongest calendar year performance since 2006.

Prices rose by 1% month-on-month, after taking account of seasonal effects.“The price of a typical UK home is now at a record high of £254,822, up £23,902 over the year – the largest rise we’ve seen in a single year in cash terms. Prices are now 16% higher than before the pandemic struck in early 2020,” said Gardner.

Impact on estate agents

As many of us already know, December is traditionally a tough month for estate agents, as the number of homes coming onto the market slows. But this year new instructions have been especially sparse, according to Hopper, as the surge in Covid cases prompted many would-be sellers to hold off on listing their home until the New Year.

“The first months of 2022 are therefore finely balanced. While most observers expect business to be brisk if supply improves that could take some of the heat out of price rises. On the other hand, prospective buyers could bring forward their purchase to get ahead of further interest rate rises.

“Either way another year of double-digit price rises seems unlikely, and sellers may need to rein in their pricing aspirations. But any loss of momentum will be gradual – in most areas, it’ll be a case of things calming down, rather than going down,” said Hopper.

Will rising interest rates impact activity?

Inflation and interest rates may be on the rise but the one thing that isn’t is the number of houses for sale, which is supporting prices and keeping the market strong, according to Robert Payne, co-founder of Bristol-based Langley House Mortgages.

“While the economic fundamentals should be weighing down on it, the property market remains robust and resilient as it has been throughout the pandemic,” said Payne.

Payne continued: “The only way prices will fall is through a surplus of supply and that’s unlikely any time soon given the glacial pace at which we build new homes.

Where are Londoners moving to?

“It doesn’t surprise me that the South West was the strongest performing English region as demand here has been off the scale,” said Payne.

“More and more Londoners are making their way down the M4,” he said.

Marcus Wright, MD of Bolton Business Finance, said London was the clear loser in 2021.

“2021 was, without doubt, the year of the regions. The capital, as absurd as it sounds, came last. Although there has been a slight slowdown in sales numbers in recent months, demand from owner-occupiers and investors is still extremely strong. The relaxation of mortgage rules will likely stimulate demand in 2022 from first-time buyers and people looking to upsize.”

Marcus Wright, MD of Bolton Business Finance,
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