2022 so far has shown the demand-supply chain in real estate to be favorable towards sellers, despite the multiple challenges in the past two years. Right now, the housing market in the UK is up.
Thus, it is the prime time to find potential buyers and tenants, all looking for a dream home. This period is great for sellers and landlords because there is a presence of customers willing to buy and rent at more and more competitive prices.
It can be quite the bargaining point that every landowner looks out for.
In this article, we will discuss some statistics which illustrate the growth of prices in the UK property market. We will also take a look at some trends which are emerging as a result of this price hike.
Are you someone looking to let, sell or buy property in the United Kingdom? Then you can opt for estate agents in the UK to book a free no-obligation sales and lettings valuation to help you out with your property deals.
What is The Current Situation In The Housing Market?
In May 2020, the Bank of England had warned of a potential 16% fall in prices as a result of the pandemic’s impact.
Despite this, in 2021, house prices witnessed a record surge due to the “stamp duty holiday”. This temporary arrangement was enforced by the UK Government in July 2020, across England, Scotland, Wales, and Northern Ireland.
According to the House Price Index from Halifax, there was a growth in the annual UK house price of 10.8% in February 2022! This also translates to a rise in house prices by £44,138 since February 2020.
Rental Growth, according to Zoopla’s estimates, reached 4.6% by 2021 September, particularly across the South West, Wales, and East Midlands. Forecasts say that in 2022, it will rise by another 4.5%. The rents will also rise above earnings in areas where it is cheaper to rent.
What Is Meant By The Phrase “The Market Is Up”?
When a market is up, it simply means two things- the demand levels are high, and supply is low. There are more buyers actively willing to buy than sellers trying to sell.
It means that now considerably more houses are being sold at present than the number of houses turning at a past indicator, like a week, month or year ago. In simpler words, if more people bought houses than sold houses, the market is up.
When you list your house in the market is also a considerable determiner of how quickly and at what price your property sells. In the real estate sector, there are various periods or periods considered the prime ‘seasons’ to sell a property.
This is usually late spring to early summer. March is considered the best month if you want to quickly sell your house.
There is a certain level of competition between the buyers as well, which reaps up the best deals for a seller. Thus, the prices of houses are at their highest during this period.
Some Trends Emerging Due To The Rising Prices
The Emergence of Smaller Cities As Desirable Property Locations
With each passing generation, a new location takes over the market. This is due to the increase in living costs and property prices, and of course, the preferences of buyers. There is constant leaning towards smaller, more economically and ecologically viable properties these days.
Property investment is always a major milestone. London is clearly amongst the biggest metropolises not just in Britain, but in the world! But when it comes to property, regional markets have and will take over due to a multitude of factors.
Various locations like Liverpool, Glasgow, Sheffield, Bracknell, Edinburgh, Leeds, Newcastle, Nottingham, Manchester, and Birmingham are rising in importance.
The major metrics are used to measure how good these places are for investment. This includes property prices, demographics, rental yields, population, and Buy-to-Let opportunities, along with the road and transport amenities.
Also, in the light of the coronavirus pandemic, many people are turning away from large, heavily populated metropolises.
Instead, they are looking toward more open, yet convenient locations to live in. According to estimates of Savills, the focus will shift towards commuter belts and outskirts. This is due to the more hybrid model of how workplaces function.
Many developmental projects, especially relating to transport, are another factor to look out for. They can increase property prices in their vicinity.
Financial Factors Like Property Prices, Interest, and Mortgage Rates Will Affect Investments
House prices in the United Kingdom are set to rise by an average of 13.1%, and in some places like Liverpool, the hike can be up to 28%. North of England and Scotland will see the most prominent boom in prices.
This is due to a stark improvement in the business and economic situation in these areas.
However, the price rise seen from 2020 to 2022 was unprecedented and extraordinary. This situation is set to slow down in the upcoming years according to estimates.
The price rise would consequently affect the interest and mortgage rates as well. However, they will rise at a rate slow enough not to put “household finances under undue stress”.
There are also proposals from the Bank of England to relax affordability stress test rules. This in turn will make borrowing easier.
In the present times, there is a higher level of environmental awareness. Youngsters are investing more in eco-friendly and environmentally conscious options. This also translates into an emerging demand for zero-carbon homes, which is a real game-changer.
The COP26 in Scotland and government incentives for modern zero-carbon homes are other factors to look out for, especially if you are a potential buyer.
For sellers, this means that ecologically refurbishing your property is a good option to increase the chances of finding a better deal. This is so that it gets a better score on the Energy Performance Certificate from a DEA.
This can considerably widen the pool of prospective buyers. Once your house is energy-efficient, it will decrease the bills as well, thus, sparing more money to spend on other expenses like a mortgage.
Changes In Housing Policies
There are many housing and housing finance reforms that are in the legislative pipeline at the moment. Most of these are slated to come into effect within the next five years. Of course, this will incidentally affect different facets of real estate.
The Help To Buy Scheme of the British government, which was enforced in 2013, will come to an end in 2022.
Savills estimates that a “larger and more diverse build-to-rent sector” will fill the void left by the scheme. This means that the upcoming five years will be prospectively fruitful for property developers, particularly those developing purpose-built rental properties.
On An Ending Note
Property demand in the UK never shows a dearth of customers, due to the limited number of properties gracing the market. You must consult a reliable real estate agency to provide you with the best advice related to property deals.
With any financial and property transactions, there come many things which you need to legally sort out. We advise you to consult professionals with experience in the property market and make good use of their recommendations.
A good estate agent will suggest houses for you from the cream-of-the-crop, thus, helping you find your ideal home!