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  • Writer's pictureLucy ay Winova

UK Property Market Predictions: 2022

Updated: Jan 27, 2022

What does the property market hold for 2022?

The last 18 months were hectic and competitive to say the least, for the UK property market. Demand for property has seen sales surge despite the pandemic and the stamp duty holiday helped entice buyers and increase house purchases as well as prices, across the UK.

In 2021, property prices rocketed to historic highs at lightning speed and ended at a record high. With annual growth at its strongest in the past decade, good news is that there appears to be plenty more room for growth in 2022. Towards the end of 2020 and into 2021, demand outstripped supply in most areas, making It a great time to sell your house.

Experts claimed that this year could bring more stability to the housing market and may finally bring more balance to the property industry after a bumper year in 2021. However, prices might be more difficult to predict as demand remains strong. Now, the question is - what can we really expect from the 2022 housing market?

Supply and Demand

In predicting future house prices, it’s important to be initially aware of what drives the increase and decrease in property values. The biggest factor is supply and demand.

As reported by Propertymark, the advised that the demand/supply imbalance has helped to drive up house prices, with 38% of homes sold for over the asking price in November 2021. Propertymark’s chief executive, Nathan Emerson, said: “Agents are not seeing any signs that demand will slow in 2022.

Buyer demand is expected to remain strong and continues to rise, so the 2022 housing market will continue to be competitive while supply might hit an all-time low. However, with the projected rise in interest rates, some of the potential homebuyers may also opt to delay their search for a home price cooling and save for a larger deposit.

Tim Bannister, a leading expert at Rightmove has advised, “While the 2022 property market will continue to be busy, we forecast it to be less frenzied than 2021, especially as more owners decide to come to market in the first half of the year.

“Movers will benefit from good mortgage availability, as well as more choice of property – especially with the usual surge of sellers coming to market in the spring. Price rises will be slower this year, compared to 2021, which will encourage some homeowners who have held back on moving to take action.”

House Prices

UK house prices grew strongly in 2021, driven by elevated levels of demand. It is believed that house prices will continue to increase in 2022 and it’ll be moderated by the growth we’ve seen in the past year – especially if interest rates start to rise sooner than expected.

It’s also anticipated that during this year that the Midlands and the North of England will show the strongest price growth, mainly driven by their greater capacity for growth.

Richard Donnell, director of research at Zoopla said: “House price growth is expected to be 3% by the end of 2022, with the highest growth projected for the East Midlands and North-West England, while growth in London is projected to remain low at 2%.

Mortgage Rates

Looking ahead, the principal of data and research at UK Finance, James Tatch stated: “We’re seeing a return to a stable path for new lending, for (2022) onwards.” He said a little bit more remortgaging activity is expected to take place in 2022 and this could accelerate further in 2023.

In two years’ time, a run of five-year fixed-rate mortgage deals is set to end – and borrowers will be looking to refinance these loans.

· Interest rates will go up

If the base rate increases again this year, it will further push up the cost of a mortgage.

The Office of Budget Responsibility has predicted mortgage interest costs to rise in 2022 and then increase by an average of 13.1% in 2023.

· There will be a remortgaging boom

UK Finance said remortgaging activity would increase in 2022, with a total of £69billion lent – an increase of 11% on 2021. Another reason people remortgage is in order to pay off or consolidate debts, which will also be on the rise this year.

· First-time buyers will have an easier time

Mortgage availability and rates have now improved dramatically, and in many cases continue to improve despite the base rate rise.

· Affordability rules could ease

A potential rule change could make it easier to qualify for a mortgage this year.

· Borrowers will fix for longer

Longer mortgage terms bring down monthly payments, potentially making it easier to pass affordability checks. They can also be a way for homeowners to consolidate debts.

Some lenders have already started to offer longer-term fixed rates, even allowing borrowers to fix for the life of the mortgage.

· Mortgages will be going green

Choosing a newer, more energy-efficient home could net buyers a better mortgage.

Several lenders launched mortgages which gave special perks to those with homes that were more energy efficient, usually requiring an Energy Performance Certificate (EPC) rating of A, B or C.

Rental Market

According to SevenCapital, a leading UK property investment and development company: “With news breaking in 2021 that renting was officially cheaper than buying in terms of monthly payments, the rental market has continued to grow from strength to strength. It is expected that rental prices will grow by 9.5% by 2025, as the UK market continues to grow alongside increased demand. With the UK economy faring better than expected in terms of unemployment and GDP growth, the UK property market forecast suggests that this rental growth is sustainable going forward.”

Regional Performance

Savills predictions suggest that the North West and the Midlands will be the leading regions for growth in England over the next four years – seeing 28% and 24% price increases respectively. In 2022 specifically, Savills have forecast growth of 4.5 and 4% in both of these regions, largely driven by the potential ceiling for growth and standard of amenities being created within key cities. Going forward, growth in the UK – particularly in regional cores – will be dictated by interest rates. While rates are expected to increase in the years to come, the consensus is that there’s enough demand in the market to sustain the current levels of activity.

Overview of 2022 predictions?

Nothing is predictable in the current climate, it seems, but there are definitely some forecasts for the UK property sector that seem a safe bet for the year ahead.

Over the past 12 months, despite many gloomy outlooks at the start of the year, the country’s housing market has remained remarkably resilient. While UK property sales were buoyed by the stamp duty holiday, appetite for the sector remains strong regardless. For homeowners and property investors alike, bricks and mortar has remained one of the most appealing places to invest compared to other avenues. An average of 3% growth is predicted throughout the year across the country.

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