A record breaking housing market for 2021, but for 2022…?
With the Nationwide Building Society reporting that in October the average UK house price has exceeded £250k for the first time and that annual house price growth could top 9% this year, is 2022 shaping up to be another year of significant change?
Between 2017 and 2019 house sale transactions averaged 1,196,000 a year. To the end of September this year we have seen in the region of 1,552,000 house sales, with three significant monthly sale peaks, as a consequence of the various stamp duty exemption deadlines. The 'Covid market' buyers seeking to upsize have also helped to boost sale numbers, as they have sort more inside and outside living space.
Our own latest LonRes (Aug – October) Lincoln Area Housing Market Report's key findings are:
- The number of properties sold fell 5.5% year-on-year.
- Achieved prices increased by 11.8% year-on-year and are now 31.0% higher than they were five years ago.
- Detached houses have accounted for 44.6% of sales in the last 12 months.
- 96.8% of properties sold in the last 12 months sold for less than £500,000.
- New build properties have accounted for 3.7% of sales over the last 12 months compared with 10.0% five years ago.
Download the full Lincoln Area Market Housing Report here.
Not unsurprisingly there remains a shortage of supply relative to demand in the housing market, although since June market activity has gradually eased back as the final push for Stamp Duty exemptions passed. It has been reported by some market pundits that the number of new instructions to October may have been 16% lower than in the pre-pandemic market.
However, Since June monthly house growth may have fallen from around 4% down to 1.8% and looking ahead into 2022 we are now seeing forecasts suggesting that in our region growth may drop down by over half of this year’s figure, to a more constrained 4% growth with regional/annual rates continuing to fall yet further over the following four years.
Three things that may well curtail house price growth in 2022:
- A rise in interest rates although Last week the Bank of England held the base rate at 0.1% but a rise is clearly coming. The housing market may react to any rise in interest rates with the fear that an upward trend is being established into the foreseeable future.
- Strong household inflationary pressures. With rising food and other costs and significantly higher energy bills next year, more of us are going to appreciate there is a real and rising cost to living! With less money in the pocket to spend, this may well push some to fall stall moving home in the near term, pushing demand down, and/or buyers becoming more conservative with their offers.
- An increase in the supply of homes coming to the market may also apply downward pressure on any price growth. Over the last couple of months, we have been very busy advising customers who are already focused on taking their homes to the market in spring next year.
So looking ahead, the property pundits seem to be forecasting UK house price growth may fall by 50% next year. Inevitable price corrections are underway in the UK property market following the steep price rises we have seen over the last two years. However, the dips are slight, for now, due to the unprecedented low level of properties for sale in the market at present.
However, if you are looking to be on the move and sell your property, and are keen to maximise your sale price, based upon some of the 2022 forecasts we are seeing the best time for putting your home on the market could well prove to be January 2022? We shall see!
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