Unrelenting buyer demand and historically low levels of available property are predicted to push house prices further into unchartered territory during 2022, nationally by 5% and for 3% in the capital, according to the latest analysis from Rightmove.
As always there will be sector and regional market variations. Currently, the most competitive markets are in Scotland, the West Midlands, the South West and Yorkshire and the Humber, and Rightmove predicts these areas are likely to see price growth at a higher rate of upwards of 7% next year. Rightmove also forecasts that the London market will continue to improve, albeit from a lower base of activity and price rises than the rest of the country, with a more muted rate of 3% growth.
The portal’s price forecast is based on a house price predictive model that uses millions of supply, demand and pricing data points across the property market, along with insights from a panel of Rightmove experts.
Tim Bannister, Rightmove’s Director of Property Data, says: “It’s been a hectic 18 months for the property market since the end of the first lockdown, with changing housing needs driven by the pandemic inspiring many moves, and the stamp duty holiday encouraging some movers to bring their plans forward. The net result as we approach the start of the 2022 market is the lowest ever available stock of property for sale per estate agency branch, yet with ongoing high buyer demand.
"This imbalance between supply and demand has resulted in buyer demand per available property being at near-record highs, suggesting that the 2021 scenario of multiple buyer bids on a high proportion of properties when they come to market is set to continue in the new year.
“We do, however, expect the pace of rises in 2022 to be slower than in 2021 due to increasingly stretched buyer affordability following this year’s rapid rises in average prices. Slowing in the pace of price rises and activity is likely to be more evident in the second half of the year as base-rate rises, higher inflation, and higher taxes begin to weigh more heavily on buyer sentiment.
"Therefore if sellers are too optimistic on their asking price in the first half of the year, they risk missing the most active part of the market. While local markets vary considerably in their supply-demand imbalance, Rightmove’s unique access to this detail and scale of data underpins our forecast for overall continued upwards price pressure in 2022 despite the prospect of base rate rises.”
While there are many variables in this pandemic influenced world that makes predictions a greater challenge, the UK’s housing market has followed a similar pattern to many other countries with an intense focus on the home. Whole of market data on buyer and seller activity shows that this dynamic is continuing, and while some early-birds have brought their moves forward, others will have been less impulsive, and perhaps waited for greater certainty on their work-life balance and the frequency of their work commute. Buyer demand is now currently up by 2% on the frenetic period this time last year, and up by 40% when compared with November 2019.
These ‘late-bird’ movers will form a significant proportion of activity in the year ahead, and an overall less frenetic pace of the market in 2022 compared to the last 18 months and a predicted return to more ‘normal’ conditions will suit some owners who have been deterred by the hitherto hectic pace of the property market. This should see more properties come to market, especially when combined with the usual surge of speculative spring sellers who look to get on with their moving plans early in the year.
There are already encouraging signs, with a 19% jump in November in the number of people requesting for agents to value their home via Rightmove compared with the same period last year. A greater supply of properties coming to market should lead to a reduction in the proportion of multiple offers on properties due to greater buyer choice, and a lessening in the pace of upwards price pressure.
Bannister forecasts: “While Rightmove sees a continuing busy market in 2022, we forecast it to be less frenzied than 2021 especially if the current scarcity of properties is eased as more owners decide to come to market in the first half of the year. Movers will still benefit from good mortgage availability and attractive rates even if base rates rise, and more choice of property coming to market and the slower pace of price rises compared to 2021 will encourage some who have held back so far to take action.”
Analysis shows that the London market continues to improve, albeit from a lower base of activity and price rises than the rest of the country. While robust overall, buyer demand per available property for sale is less strong than in other parts of the country. The fast pace of price rises in the boom prior to 2016, the reaction to Brexit, additional taxes for overseas buyers, and Covid induced migration dynamics on both domestic and international movers have all played their part in the capital’s slower pace in the last five years. Rightmove predicts that the price of property coming to market in London will rise by an average of 3% in 2022.
Bannister concludes: “While London overall will continue to be a price drag on the national average, there will be hotspots and cooler spots as its own unique and diverse markets continue to operate at different speeds. International buyers have been more on the scene, and both at this top end and lower down the price brackets, buyers are finding some attractively priced properties as the combination of London’s post-boom rebalancing and Covid effect changes on supply and demand in its many sub-markets plays out.”
James Forrester, Managing Director of Barrows and Forrester, says: “The dark clouds of uncertainty that hung over the UK property market for much of 2019 and early 2020 have yet to return and there are no signs of them doing so in 2022 either. So we can expect more of the same where upward house price growth is concerned, although it’s likely that the market will shift down a gear or two.
"We’ve seen consistent levels of annual house price growth hit double figures throughout 2021 and this has been driven by an imbalance between supply and demand, but also a push for bigger homes in the wake of lockdown restrictions.
"While there will never be enough stock to satisfy demand, this trend for larger homes is unlikely to be as intense going forward and so we can expect a slight correction in this sense. A five per cent uplift for the year is probably a little bit conservative and it’s fair to say that’s the minimum benchmark for market performance over the coming year.”
Marc von Grundherr, Director of Benham and Reeves, comments: “While there’s no crystal ball that can truly predict the fortune of the property market, it’s likely that next year will see further growth even with the potential threat of a marginal uplift in interest rates.
"Any increase is likely to be manageable for the average homebuyer and it simply won’t deter demand which will continue to inflate prices as buyers battle it out for limited stock.
"Those on the ground in the London market will tell you that the prediction of a three per cent increase is quite some way off expectations. London has been building a serious head of steam in recent months, buoyed by a return to the workplace, as well as an uplift in foreign buyer demand as travel restrictions have eased.
"Yes, the latest threat of the Omicron variant may now play a part, but it simply won’t derail a London market that has finally awoken from a slumber of subdued property price growth. We expect the central London market to climb by four to five per cent at the absolute least, while outer London will see further growth still.”
Adam Kamani, CEO and Co-Founder property portal of MoveStreets, adds: “It’s important to remember that despite the end of the stamp duty holiday, the hopper of property transactions remains full to the brim. As a result, we will hit the ground running in 2022 with many sales completing in the early stages having been agreed in the final months of this year.
"This delayed impact on property price growth will ensure that any festive period of calm is short-lived and any uncertainty around the current Covid landscape is also negated, with house price growth remaining robust.
"While the ship is certainly likely to steady in terms of the sheer volume of market activity seen in 2021, we will remain a nation of aspirational homeowners in 2022 and far beyond and the market will keep moving forward.”