Published: 18/01/2022 By Tam van WykBefore we get into my thoughts about what’s going to happen in the housing market, I would like to wish you all a belated Happy New Year. And, for the first time in a while, it looks like we can look forward to the next twelve months with real confidence.
In contrast, at the start of last year, we were going into lockdown. It wasn’t until May that we were allowed back out. After that, things improved considerably - more and more of the restrictions were eased, and the economy began bouncing back far faster than many had anticipated. Then, along came Omicron and where there was hope, there was doubt.
Throughout it all, the one constant had been the housing market. Demand and prices rose by an impressive 10.4% last year and rents were up by 8.4%. In London, they were up by 12.6% when compared to March 2020. Those are the sort of figures we would all be seriously happy with in any normal year, let alone one blighted by Covid.
So, what should we be expecting from the housing market going forwards? I’m glad to say, it’s now becoming clear Omicron is nowhere near as bad as first thought. Indeed, the worst may already be over, and we are now back on track. That’s good news for the housing market. 2022 has already opened in brisk fashion. At the same time, there are reports of serious stock shortages, especially in the rental sector. Looking further ahead, though, the rising cost of living and the expected increases in the base rate mean growth is likely to come down to more sustainable levels over the coming months. Many experts are forecasting growth of around 3% to 5%, which is far more sustainable than the double-digit growth of last year, and increasing activity from first-time buyers as mortgage affordability tests are eased.
There is likely to be one other significant trend this year. I’m sure you’ve all seen the headlines in the press about the race for space and our flight to the country. The return to the office means this process will be going into reverse, with prices growing fastest in more urban areas, especially in London, but slowing sharply in rural areas. There were already signs of this happening last year but now the process is likely to accelerate and that’s for both sales and rentals.