Conveyancers and other property professionals may be breathing a sigh of relief and looking forward to a well-deserved rest as a historic year comes to a close, with the greatest annual volume of sales and purchases since 2007. But how will the real estate market look in 2022? There are other factors at play, including the threat of Omicron and the first interest rate hike in three years due to increasing inflation. Experts including estate agents in Leeds say despite these obstacles, we enter the new year with a strong property market: according to Halifax, UK home prices increased by 3.4 percent in the three months ending in November 2021, the best quarterly rate since 2006.
Predictions for the next 12 months differ depending on who you ask, but there appears to be widespread agreement that, while the market will remain active, it will likely be less so than in the previous 18 months. Right Move, an online platform, predicts that prices would grow another 5% in 2022, but that stretched buyer affordability and an increase in home stock will cool the market. It cites indications of a traditional December decline – with the average asking price of a home dropping by 0.7% – as a major sign that the market is already returning to more normal levels.
Because of the squeeze on spending power, the Bank of England’s 0.25 percent interest rate hike is anticipated to impede the pace of sales and accompanying price increases. It will have an impact on mortgage rates, which have been historically low for such a long time. Although the hike to 0.25 percent from 0.1 percent was earlier than predicted, it is not entirely unexpected, as experts predict that rates will continue to grow through 2022. Of course, there are regional differences, with many forecasting that the divide between home values in the north and south will narrow over time.
The highest price rises next year, according to Zoopla, will be in the North West, where property prices are rising at an exponential rate — locations like Blackburn and Rochdale are anticipated to climb by 10%. London, on the other hand, will develop at a considerably slower rate of roughly 2%. One thing that experts agree on is that people will continue to want to shift where they live — the epidemic has prompted many individuals to reconsider what they want from their homes in the aftermath of the new hybrid working model.
And it appears that many people have made it a New Year’s Resolution to change their ways. According to a Zoopla survey, 22% of households are still looking to relocate in the next 18 months as a result of the epidemic. The newest Right Move data backs this up, showing a 19% increase in valuation inquiries from homeowners to estate agents compared to the same time last year.
The government’s new version of the Help to Buy equity loan scheme, which is slated to operate until March 2023, will also keep the market afloat by providing a 5% deposit to first-time buyers struggling to climb on the property ladder.
It is expected to see a lot more sellers sell and rent with the intention of buying later in 2022 or 2023. As with all projections about the UK housing market, there is a great deal of uncertainty when it comes to predicting what will happen in 2022 – especially given the potential impact of the Covid issue and the likelihood that Stamp Duty exemptions will not be increased in the coming year. There are clearly some broad economic headwinds that must be taken into account in any forecasts. As the repercussions of Brexit become clearer – certainly! – these include a predicted increase in interest rates, greater rates of inflation, continued Covid limitations, and general economic instability.
It is predicted that the rental market in 2022 would be similar to that of 2021, with a gradual increase in rents and similar volumes. In terms of the sales market, It is believed that the number of property transactions in the UK will fall from 1.1 million in 2021 to a more modest 890,000 in 2022, and that this 20% drop will be felt across the board, including in our own Eastern region. Nobody has a crystal ball, and only time will tell, but one thing is certain: in 2022, conveyancers and other real estate experts will be in high demand. Despite the fact that prices will grow at a slower rate this year than in 2021 as a result of rising interest rates, taxes, and the energy crisis, the market will not collapse owing to a lack of supply.
Nobody has a crystal ball, and only time will tell, but one thing is certain: conveyancers and other real estate experts will still be busy in 2022. Despite the fact that prices will expand at a slower pace this year than in 2021 due to rising interest rates, taxation, and the energy crisis, the market will not fall off a cliff due to a lack of supply.