UK housing market 2022: A buyer’s market or a seller’s market?
In 2021, the UK housing market saw the purchase of a whopping 1.5 million houses which is said to be the highest purchase number since the global financial crisis. According to the Office for National Statistics, the average price of a house in the UK in November 2021 hit a high of £271,000, which is essentially a 10 per cent increase since November 2022. According to most experts, pent up demand, the introduction of stamp duty holiday, the limited supply of houses and low mortgage rates is the reason for this sharp rise in property purchases.
A growing population coupled with the increase in the number of buyers is what is driving the UK housing market. With the imbalance between demand and supply, the average price of property is increasing at a shocking rate. In fact, in November 2021, 38 per cent of the houses in the UK were sold for more than the asking price, which is a certain nod to the rising demand and limited supply. Will this trend continue in the coming years? What is the future of the UK housing market in 2022? This is what the Clapham estate agents have to say about the UK housing market in 2022.
With almost one-third of the houses in the UK being sold above their asking price in 2021, many experts believe that 2022 will continue to be a seller’s market. Due to a rising supply, essentially thanks to all-time-low mortgage rates as well as the rising demand from first-time buyers, sellers seem to have the winning hand. As more people are working from home, the demand for the “right home” has certainly increased among buyers. Since individuals are spending more hours at home, homeowners, as well as potential buyers, are looking to upgrade their homes and their lifestyle, which is what has led to this significant increase in buyer demand in 2021; most experts believe that this trend will continue in 2022. According to Battersea estate agents, the competition among buyers has never been higher, with many buyers willing to pay a premium to buy their dream home.
Change in buyer preferences
In ‘prime areas’ such as London, the average property growth price has decreased by a whopping 4.2 per cent thus reaching a six-year low. Again, this has a lot to do with the change in buyer preferences. Since people no longer have to worry about commuting to work, many homeowners are making the shift from the city to the suburbs. In 2021, the UK housing market saw a vast spike in the demand for properties in the boroughs and the suburbs, as these properties were more spacious and relatively cheaper. In this case, the buyer’s had the upper hand as they were able to pay less for more. If the shift in house preferences continues in 2022, we could see a huge demand for properties in the suburbs with a drastic reduction in the demand for city centre properties.
The race for space
Covid-19 has certainly had its impact on health, work, travel, as well as the housing market. As the ‘race for space’ continues, even as the months go by, the number of potential buyers that are looking for spacious homes with home offices and outdoor spaces will continue to increase. As demand increases, most sellers are left asking an important question: how much is my property worth now? However, most experts believe that the introduction of affordable housing in the early months of 2022, which is already in the pipeline, will certainly lend a helping hand in reducing the average growth price. Despite the end of the stamp duty holiday in September 2021, the demand for property continued to remain at an all-time high, with Christmas and New Year seeing some of the most fast-tracked property sales.
‘Normalising’ mortgage rates
To boost the buyer’s confidence and help the housing market, the UK government decided to reduce the rate of interest. But, as the economy normalises, so do the rates of interest. With approaching inflation and an increase in the cost of living, the Bank of England will soon start to feel the pressure, which in turn will lead to increased mortgage rates. While most buyers might not be impacted by the staggering increase in interest rates, some buyers will certainly feel the pinch.
All in all, experts feel that the housing market in 2022 will continue to see a growth in prices, but at a slightly modest rate. Essentially, 2022 seems to be a seller’s market, but the buyer could have the upper hand once the supply catches up to the demand.