What's on the cards for property prices in 2022?
What’s on the cards for property in 2022: Will prices continue to increase? Is the mass exodus to the countryside over? Here’s our predictions
- Last year, home working meant buyers favoured large homes and rural locations
- This is set to continue, but ‘hybrid’ working will increase appeal of suburbs
- Cost of living squeeze and rising mortgage rates will hit buyers’ budgets
- North West could be house price winner of 2022, according to Savills
Could home working have permanently changed how we live and where we want to live?
In 2021, the average price of a detached property surged by 14 per cent, driven by the stamp duty holiday, the need for more room for home offices and a desire for larger garden for socialising.
Houses in villages and the depths of the countryside were most in demand, in a race for space that led to record spending on property.
In 2021, the average price of a detached property surged by 14 per cent, driven by the stamp duty holiday, the need for more room for home offices and a desire for larger gardens
With remote working likely to last for a while and become the norm for many employees, will this trend continue in 2022?
What’s the outlook?
The chase for homes in the countryside seems set to continue.
Some of this will be financed by lockdown savings and househunters will still be able to borrow at advantageous rates, although interest payments are heading upwards.
The rise of hybrid working — part at home, part in the office — is predicted to deepen our passion for the suburbs, which means prices in commuter areas should remain strong.
Is this bad news for flats?
A really long commute to the office, even two or three days a week, does not suit some people who moved to more remote rural locations. These workers are picking up pieds-a-terre, or returning to cities full-time to enjoy an urban buzz.
Baljit Arora, of Manchester estate agents Orlando Reid, says an influx of apartment buyers began last autumn. But whether you will be able to pick up a bargain flat, or any other type of home this year is uncertain.
The number of areas where the average price is below £150,000 has dropped by 28 pc. There are no such location in London, the South East or the South West, according to analysis by estate agents Savills.
Will more homes go on sale?
The ‘stock’ of homes on estate agents’ books has been at a record low. Nick Leeming, of Jackson-Stops, says: ‘There are currently 19 buyers for every newly listed home.’
But he expects more properties may become available as owners realise how much their home has risen in value since 2020. Property website Rightmove reports that a surge in stock is already under way.
On Boxing Day, 21 per cent more people decided to put their homes on the market than on the same day in 2020.
How will it affect budgets?
Forecasts range from the cautious to the more confident, but the cost of living squeeze and higher interest rates will hit buyers’ budgets.
Fixed-rate mortgage deals are becoming more expensive. Lender Halifax predicts an average rate rise of just 1 per cent, while property website Zoopla estimates 3 per cent. Rightmove’s growth forecast is 5 per cent.
Where will prices rise most?
Savills forecasts that growth will be fastest in the North-West, where the average price may be 4.5 per cent higher by next Christmas.
The North, the Midlands, Scotland and Wales should also advance by about 4 per cent.
The tempo will be less lively in the South West, South East and East of England, where rises of 3 per cent – 3.5 per cent are likely. London could again be the laggard, up just 2 per cent.
South East homes, like these in Cranbrook, Kent, could see subdued price rises of 3% in 2022
Aneisha Beveridge, of estate agents Hamptons, pinpoints the North-East as the region with the most potential, followed by Scotland — which hints at a further narrowing of the north-south house price divide.
In 2017, there was a 117 per cent difference between the average price in the North and that in London. Now it is 94 per cent.
What about first-time buyers?
Thanks to lockdown savings, as many as 408,379 people achieved the dream of a home of their own in 2021, according to the Yorkshire Building Society, an increase of 35 per cent on the previous year.
How many can follow them on to the ladder this year will depend on whether the borrowing rules are relaxed.
Habito, the online mortgage company, has launched a deal for couples allowing one of them to borrow up to seven times their income, while the other can borrow up to five times what they earn.
But the struggle to raise a deposit has become even tougher. The average 20 per cent deposit on a home now equates to a record 110 per cent of the pre-tax income of a typical full-time employee.
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