Property Market Update - February 2022
With the cost of living increasing across the UK, we take a look at where you stand in the housing market today, whether you’re a buyer, seller, or investor.
Optimism over rising stock levels as prices remain high in all regions
The start of the year saw house prices remaining consistently high, with Rightmove and Halifax reporting a 7.1% and 9.7% annual increase in prices respectively. This comes as the ONS releases its annual House Price Index (HPI), announcing that house prices have gone up by around £27,000 in the UK since December 2020.
Price rises have been driven by strong demand, and a subsequent lack of stock in the types of homes people have been drawn to since the pandemic - larger homes in greener areas. Last year, Chestertons reported a 10% drop in the number of properties for sale. However, growing levels of seller enquiries in the first few weeks of 2022 indicate that stock levels may begin to pick up soon. Rightmove has reported a 15% increase in seller enquiries than this time last year, leaving pundits positive that prices may start to level off with an influx of available stock.
Source: ONS House Price Index
Rental costs spike as workers return to the office
The market is also readjusting to the return to offices taking place in the capital – the rental market is seeing an uptick, with Zoopla reporting that demand for rental properties was up 76% in January compared to last year.
Chestertons reported that rental stock did not keep up with demand in this quarter, having 69% fewer properties available. Coupled with existing renters staying put during the pandemic, this refreshed demand has led to a rise in prices for new renters – paying on average £62 a month more than before the pandemic.
Price rises in the capital: a closer look
While lockdown - and the resulting stamp duty deadline - initially put paid to rapidly increasing house prices in the more affluent areas of the capital, new data reveals prices are rising above pre-pandemic levels. In Islington, prices are now on average £120,000 more than they were in 2020, closely followed by Camden and Richmond, leading the recovery in the housing market. This puts average prices in the capital at well over double for the rest of the UK, and the top boroughs nearing £1 million.
Here’s the largest growth by borough:
The squeeze on household finances
This comes as the cost of living in the UK rose by 5.5%, reaching a 30-year high, and the energy regulator Ofgem's increase in the energy price cap – which is set to rise to £1,971 this April.
The Bank of England also announced this month that the interest rates will again be going up to 0.5%, putting additional pressure on homeowners and buyers alike. This will result in the cost of lending rising – meaning automatic tracker mortgages and standard variable rates will both increase, should lenders choose to pass the costs onto consumers.
While it can't be predicted how these changes will manifest in the market, they are likely to affect market trends over the coming year, as mortgage and utility costs are a key consideration for buyers.
What does this mean for you?
We are dedicated to giving our clients pragmatic advice and the personal touch. As the housing market becomes increasingly competitive it is more important than ever that agents and lawyers work closely together to ensure their clients have a successful and timely transaction.
Buyers
- Competition is still high – but more stock could become available later on in the year
- Mortgage rates could be subject to change as lending rates rise
- Renting is likely to become more expensive if you are a first time buyer or chain free
Sellers
- There is plenty of competition for properties with the right features - but experts caution sellers to be realistic when it comes to pricing
- The return to offices and the return of international students may be good news if you’re looking to sell a smaller property close to the City
