What’s in store for the UK property market in 2022?

What a year 2021 was! Just as we came out of one variant, we headed into another, possibly more infectious one and talk of more lockdowns ensued. The interest rate rise that everyone predicted was announced a few weeks ago, the first in 3 years. And more hikes are predicted this year to curb inflation. We had the stamp duty holiday which can be considered to be a success in that it kept property transactions buoyant, but it also helped to cause the inflation that we are now seeing. And the London rental market seems to have made its first steps of recovery after a couple of tough years. This has taken place despite a fairly healthy rental market elsewhere in the country.

So, what are the predictions for 2022?

Well, inflation is expected to continue being an issue as many economies globally struggle to come to terms with supply shortages largely cause by the pandemic. The Consumer Prices Index (CPI), which is a measure of inflation, rose by 5.1% in the 12 months to November 2021. That’s one of the largest increases of the last 20 years. And for this reason, it means interest rates are expected to continue rising to keep inflation at bay. The Office of Budget Responsibility (OBR) has forecast that rates could reach as high as 3.5% by 2023 which is a concern seeing that the current rate is only 0.25%. This means we are likely to see the beginning of the end of the era of record-low interest rates.

Rightmove expects the housing market to be less frenetic than it was in 2021, with more balance between buyers and sellers. Part of the reason for the price inflation was, and is, the lack of supply of housing stock. Despite this, Rightmove predicts that house prices will rise by 5% this year on a national level and one has to agree that the underlying numbers still appear strong. For example, requests from homeowners to estate agents to have their home valued were up 19% on this time a year ago. And November’s data shows buyer numbers up by 41% on 2019, and 3% up on 2020.

However, until we hear more from the government on how long its directive to work from home will continue (for those that are able to), and if more restrictions are on the way in January/February, nobody knows how the market will pan out with any degree of certainty or what economic impact it will have on the property market. At the time of writing there seems to be some light at the end of the tunnel with talk of an end to the restrictions coming soon.

In terms of regional hotspots for 2022, Manchester continues to be a region where strong growth is expected. And Birmingham too is also expected to be one of the biggest winners largely due to the HS2 project and being the host of the Commonwealth Games in 2022, which will improve it presence on the international stage.

The duo behind The Property Podcast, Rob Dix and Rob Bence, suggest that the top areas to invest in the UK for 2022 are Manchester, Liverpool Derby and Nottingham.

They go on to make bold predictions of property price growth between 6-8% which is more aggressive than many other official predictions, including the Rightmove prediction above. For London they expect the market to grow by a modest 4%. Check out their valuable podcast for more information.

Clearly, making predictions is a bit of fun and no one can predict the future with any great level of certainty but getting the views of a multitude of experts across the industry on what’s likely to happen for 2022 will keep you informed and set you up to act if there are any changes in the market, but at the same time, as the great American football coach once said, always “expect the unexpected”.