Covid-19 changed the world as we know it. Economies started to fall; countries faced turmoil and every sector was severely impacted by the pandemic. The real estate market in the UK also took a hit, with property transactions coming to a complete halt during the first nationwide lockdown. To reverse the damage, the UK government introduced the stamp duty holiday which was one of the many factors that actually helped the UK estate market overcome the speed bump. After that, the average house prices in the UK started to rise tremendously, with UK house prices rising at the fastest pace in 15 years! In 2021, the average price of property in the UK hit a record high, with properties for sale in South Kensington reaching their peak! Keeping with the current demand and market trend, it is predicted that the house prices and rents in the UK will continue to rise in 2022; this is what the experts have to say!
House prices in 2022: Predictions
Many experts believe that asking prices will increase by a whopping 5 per cent in 2022! That means the average asking price of houses in the UK could increase by £17,000. Even though the stamp duty holiday will no longer exist, most experts believe that the house prices will continue to rise in 2022, that too very steadily. This could be due to the lack of supply in the UK – while the demand for property is on the rise, the supply is seemingly constant. However, with new developments and ongoing housing projects in the housing market, the supply might increase in 2022, which should make things slightly easier for potential buyers.
With that being said, some experts believe that the introduction of new developments and the influx of supply in the housing market will actually increase the average price of the property. Basically, due to the increase in construction costs, such as the cost of building material and labour cost, as well as with shipping restrictions due to the pandemic, the cost of new builds will increase. Hence, the average price of property in the UK will continue to increase, at least for the foreseeable future. According to Steve Jacob, the CEO of Fabrik Invest, the increase in interest from investment funds and government institutions will also play a role in increasing the average price of houses in the UK.
According to Rightmove, there will be a large number of houses that will enter the housing market in the first half of 2022. On their platform, Rightmove has seen a 19 per cent increase in the number of potential sellers asking for a property evaluation, which means people are likely to put their houses on the market in the coming year. While the property market in 2022 will be busy and certainly at a high, it might not be as chaotic and hyped as the property market in 2021, which is a saving grace for buyers, sellers, tenants and landlords.
Rents in 2022: Predictions
Essentially, it is the lack of high-quality rental properties in the UK market that will lead to increasing rental prices. Due to the multiple lockdowns and work from home, people are looking to upgrade their homes, and their lifestyles. Buyers and tenants are looking to move into bigger spaces, better homes and properties with outdoor spaces such as gardens, balconies and patios. Keeping in mind that the demand is at an all-time high, while the supply is essentially limited, it is expected that the rental prices will continue to rise, at least in 2022.
In order to boost the property market, encourage potential investors and help first-time buyers, the UK government decided to lower the interest rates. Many investors are actually using these low-interest rates to buy investment properties, especially in the build to rent sector.
With companies such as John Lewis & Partners and Lloyd’s expanding from the commercial property sector to the residential property sector, especially the build to rent sector, it is a clear indication that this sector will be strong in the future. While the supply for rental property will certainly increase, the supply might not be able to keep up with the demand, which is what will lead to a rise in rental prices in 2022.