What’s happening in the property market?
The last few years have been unpredictable, the property market included. Many of us have been left wondering ‘is now the right time to buy, move, rent?’ Using the information we already know, let’s take a look at what’s going on in the market and what 2022 might have in store for us.
Why have property prices increased?
The average UK property value is now £252,687. House prices have risen by 10% over the past year and here’s why…
Stamp duty holiday – during the pandemic people could move home paying no tax or a reduced amount
Low-interest rates – buyers are being incentivised by record-low rates (below 1%!)
Change of priorities – the pandemic has encouraged people to reassess what they want from their home after being stuck in lockdown e.g. office space
Supply shortage – There is a lack of new houses being built to accommodate for the demand
For first-time buyers, it does make it a little trickier getting on the property ladder because you’ll have to save a larger deposit. However, there are 5% mortgage deals available and lending criteria isn’t as strict as it has been.
For homeowners, the surge in house prices does mean you’ll be paying more if you decide to move. But don’t forget your house will have increased in value too, so you’ve got more equity to play with if you decide to remortgage (and pull money out) or move home.
Why is rental demand so high?
Browsing on Rightmove, you’ll soon find rental properties are sparse. Take a look at what’s behind the soaring demand…
Pandemic restrictions ended – young people are moving out on their own
Availability - houses aren’t being built quickly enough to accommodate for our ever-growing population
Tactical renting - people are renting so that they can move swiftly when their perfect property comes on the market
Job changes and losses – people are looking for a change in surroundings or relocating altogether
With the supply of rental homes lagging, it’s a good time to be a landlord. Rent prices are on the increase and any new buy-to-lets are likely to be grabbed quickly. If you think you’re in the right position to buy a second home and would like to learn more about property investing, get in touch.
What could happen in 2022?
The ‘Property Industry Eye’ tells us that house prices will continue to rise but at a far slower rate than we’ve seen – by 3% at the end of 2022. We’re also expecting mortgage interest rates to increase but many will be sheltered from these changes being on a fixed-rate mortgage. Forbes suggests the base rate could reach 1% by the end of 2022.
What's more, the Bank of England has revealed they are considering easing borrowing restrictions which would make mortgages affordable to more people. If this happens, house prices could be pushed up again which indicates a recession might not be imminent as we expected.
Although there may be economic indicators as to what may happen next year, none of us hold a crystal ball. We can only stay proactive with our finances and do what’s right for our current circumstances. So, for home movers or aspiring first-time buyers and landlords, don’t ignore a good opportunity because you’re holding onto the hope that property prices may come down or the fear that interest rates will rise. We can always save a little more, we can always wait a little longer but if you spot the right property for the right price, make it the right time!
