Experts believe that as we approach 2022, the UK property market will become more stable. This comes after the market’s peak in 2021, when a frenzy of sales and purchases across the UK including the properties for sale in Aylesbury, pushed house prices to new highs.
What exactly does this imply?
The UK property sector had a banner year in 2021, with around 1.5 million homes sold across the country. According to Halifax’s newest Property Price Index, average UK house prices hit a new high of £276,091 in December. This was a 1.1 % gain over the previous month, and it was the sixth month in a row that house prices in the UK grew. In December, annual house price inflation reached 9.8 %, the highest amount in 14 years. As a result, average house prices by the end of 2021 were £24,500 more than they were at the end of 2020. This increase was fueled in part by a supply-demand imbalance. According to Propertymark, by November 2021, each estate agency branch had only 20 properties available on average. This is the lowest level on record in over two decades. As a result, 38 % of properties sold in November for more than the asking price. Experts were astonished to see such a market growth, given that we had tight limitations in place for the first half of 2021.
Experts anticipate that by 2022, the market will have returned to a state that is more akin to its pre-pandemic one. Expert predicts that house sales would “fall by 20% from a high of 1.5 million in 2021 to 1.2 million in 2022.” By the end of 2022, house price rise is forecast to be 3%, with the east Midlands and north-west England experiencing the fastest growth, while London’s growth is expected to continue at 2%.”
What is the overall effect?
There are several reasons for the house-buying craze in 2021. In July 2020, a stamp duty holiday was implemented, which did not fully expire until September 30th, 2021. Many people were inspired to contemplate moving or to accelerate a planned move as a result of this. Restrictions on Coronavirus were also a factor. The shift to online, at-home work that began in 2020 as a result of the epidemic continued into 2021. As a result, many people felt confident in their ability to relocate without jeopardising their jobs. After instance, why would someone pay a premium for a cramped apartment in the heart of town if they only had to work one day a week? A property in the suburbs with a garden suddenly seemed far more tempting.
Why do experts predict market stabilisation in 2022, when we are still dealing with the effects of the pandemic? The number of property owners requesting valuations has increased, indicating that more properties may be available soon. This will aid in redressing the supply-demand mismatch, hence reducing the price increase. The stamp duty holiday’s expiration has taken away the incentive that drove many sales in 2021. A continuous increase in mortgage rates may also deter prospective purchasers. Last month, the Bank of England increased interest rates from 0.10 % to 0.25 %. People may be less likely to consider themselves able to carry the financial burden of moving or buying property for the first time in 2022 due to a general increase in outgoing expenses as a result of inflation, which hit 5.1 % in November.
However, multiple indicators indicate that property will become more accessible to first-time buyers in 2022. First-time buyers may find it easier to secure a mortgage in 2022, thanks to a more stable market, increased availability, and reduced costs. The Bank of England has said that it is considering eliminating the affordability stress test from the mortgage application process. Potential borrowers must demonstrate that they could afford their mortgage payments even if interest rates jumped by three %age points. The elimination of this requirement could make mortgages and, as a result, home purchases more accessible.
The housing market has had a phenomenal year in 2021, fueled by a robust economic recovery, widespread reconsideration of housing needs, ultra-low mortgage rates, and, for the most part, a stamp duty incentive. These market circumstances will be tough to repeat in 2022.
The persistent supply-demand imbalance showed a “tempering of housing price increases” rather than price declines. Experts predict annual price increase of 3.5 % for the entire country in 2022, although this is based on the assumption that the so-called “race for space” will relax.