The home buying and rental markets have faired well over the past couple of years, despite the challenges presented by the pandemic and possibly because of government help. But as we head into 2022, should we expect to see a continued buoyancy in the market?
While no one is predicting a sudden or dramatic decline in the housing market, it looks as though there is some uncertainty over how much will change.
What’s affecting the property market?
We’ve seen a resilient housing market over the past couple of years. The stamp duty holiday and the desire for people to move out of cities and find open space during lockdown or an extra room for a home office to accommodate new working from home lifestyles have all helped to drive demand in the purchase and rental sectors.
However, the stamp duty holiday has ended, and we see life returning more to the “status quo ante” than predicted, so how will people respond?
We also see an increased cost of living, higher interest rates and general economic uncertainty, all of which will affect the confidence of tenants and homeowners, but to what extent? The housing markets looks uncertain; however, some key themes are prevailing, which we’ll try to draw our predictions from.
Nine key predictions for 2022
Early predictions for 2022 already suggest the following:
• Economic uncertainty persuades homeowners to stay put, reducing the number of sales instructions compared to a more buoyant market in 2021.
• A reduced supply of houses to the market will see house prices increase. To what extent is debatable, but prices should level out through the year.
• A lack of properties in the rental market will also continue the ongoing increases in rental prices.
• However, rises in house prices could encourage more homeowners to sell their homes, ameliorating the supply of stock in the market.
• Increasing rental legislation and rising house prices may lead to more landlords selling their rental properties, putting further pressure on the rental market. Energy-efficient, new-build homes continue to be in demand, but supply will struggle to meet demand as shortages in materials and labour continue to have an impact.
• Homes in city centres will increase in popularity again as people head back to work in the cities to avoid commuting. However, there may still be a continued drawn to the suburbs as employees make hybrid working arrangements permanent.
• Build to rent will continue to grow and diversify to include the individual house market, rather than just flats. Big names, including John Lewis, are entering the market and attracting investors enticed by this booming market.
• The delayed Renters Reform Bill is expected to take effect this year and will encourage more people to consider the rental market as their next home because of the greater protection enjoyed by tenants.
A positive outlook for the future
An uncertain economic environment may still have a cooling effect on the housing market. Still, we expect cautious optimism after people see the worst of the pandemic recede behind them. This will probably be enough to keep the market moving and give cause for a more positive outlook on the year ahead.
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