House prices are set to soar
House prices are set to soar ever higher in 2022, according to Rightmove, as sustained buyer demand and historically low levels of available property endure. Several uncertainties continue to loom over the housing market, including the threat posed by the Omicron variant, which could have a significant impact on supply and demand, as well as playing a role in any possible rise to the Bank of England’s base rate.
Even so, the latest analysis from Rightmove predicts that house prices are set to soar nationwide in 2022 by 5%. Despite an expected increase in listings next year, these will likely still struggle to keep pace with persistent demand. According to Rightmove’s Tim Bannister the “imbalance between supply and demand has resulted in buyer demand per available property being at near-record highs, suggesting that the 2021 scenario of multiple buyer bids on a high proportion of properties when they come to market is set to continue in the new year.”
– Average house prices in the UK increased by 10.2% in the year to October 2021 – On a non-seasonally adjusted basis, average house prices in the UK decreased by 1.1% between September and October 2021
– House price growth was strongest in Wales where prices increased by 15.5% in the year to October 2021. Source: The Land Registry Release date: 15/12/21 Next data release: 19/01/22
Demand Remains High
New buyer enquiries rose slightly in the Royal Institution of Chartered Surveyors’ (RICS) November survey, with a net balance of +13%, while new instructions fell for the eighth successive month to -18%. The end of the Stamp Duty holiday, among other factors, has contributed to a dip in housing market activity, with Q3 recording a 26% fall in purchases compared to the previous quarter, according to UK Finance data.
Despite this, Q3 purchases remained 10% higher than their 2019 equivalent. The largest growth in the recent data came in the rental market, with rent increases at a 13-year high. Average rent, excluding London, now stands at £809 per month, according to Zoopla’s latest Rental Market Report. Tenant demand returned a net balance of +48% in November and RICS foresees further upward movement in rent prices because of this demand and a shortage of rental properties. The rental market is currently strongest in the central zones of major cities, where demand is twice as high as in outer zones.
Housing market outlook
“Looking ahead, there is now greater uncertainty than has been the case for quite some time, with interest rates expected to rise to guard against further increases in inflation. Economic confidence may also be dented by the emergence of the new Omicron virus variant, though it remains far too early to speculate on any long-term impact, given insufficient data at this stage, not to mention the resilience the housing market has already shown in challenging circumstances.” Russell Galley, Managing Director at Halifax
Buyers now need a mortgage agreement in principle in place at the viewing stage if they are to get that dream home.
Source: Halifax December 2021/Quilter Residential Property Review
All details are correct at the time of writing (15 December 2021)