Housing Market Predictions – 2022
4 min readPredictions – sometimes they become a reality and, at others, they do not. The forecast for the property market in 2021 was rather gloomy and yet look at what happened! There was a boom that continues to rise. Looking at 2022 and the various factors that could affect the housing market, the prediction is that it will remain steady, if not as high as 2021.
This is what real estate agents like Alexander & Co. in South East England are looking forward to. With the economic growth in that area, Aylesbury property sales and others in the region are expected to do well.
We look at some of the features which could affect the housing market – positively and negatively.
Pros:
Additional space: The pandemic changed the priorities on accommodation for people. With the lockdowns causing people to be confined to homes and working online, more spacious accommodation became a trend – with additional rooms for office space and an outdoor area a necessity, for a garden or a place for recreation. This led to many people moving away from cramped city areas to the suburbs and rural regions.
Now, people have become more warily conscious of confined spaces like apartment buildings, especially after the outbreak of the contagious Covid-19 virus. So the requirement for more spacious independent accommodation started rising. Even though the lockdowns are over and some people have returned to work at offices, the healthier environment of separate and larger accommodation is still popular. This, in turn, leads to positivity in the housing market
Demand exceeding supply: Whenever supply is not enough to meet the demand, both the requirement and price rise. This is similar to the property market. The demand far exceeds the supply, which leads to a clamour for property and, in turn, an increase in prices as well.
Affordability:
Unforeseen savings:
With the lockdowns causing the closure of so many facilities, expenditure on other than essential items, such as random shopping, entertainment, eating out, holidays etc was curbed. This, in turn, led to some unexpected savings which came in handy for some people looking for the opportunity to own their own homes.
Price/income and repayment/income ratios:
The furlough scheme ensured a major portion of the employee’s income. This, in turn, leads to positivity in the housing market. Check out these apartments for rent in palmdale ca.
Fiscal intervention:
The 95% loan to value mortgage scheme has been an incentive for prospective buyers. Other low interest mortgage offers have also appeared on the market, making it easier for people to take advantage of the same and pay the required deposit.
Return to Yield:
Professional investors will look at areas in “emerging locations”, where the demand is likely to grow over time. At the same time, they will search for reasonably priced properties in those regions. Thus, their return to yield will be positively assured.
Foreign investment:
The vaccination programme has been successful and some of the international travel restrictions have been lifted. The UK housing market has always attracted foreign investors and this is likely to continue throughout the rest of this year and 2022 as well.
House price inflation:
This has been spreading across the UK, except for London, which has remained quite stable. Since the price levels are higher in London, the impact of the SDLT holiday was not so marked there as in the rest of the country. However, now with a hopeful return to normalcy, the London housing market also looks set to revamp. This will be a positive for real estate.
Cons:
SDLT holiday:
With the phasing out of the Stamp Duty Land Tax holiday and its closure wef 1 October 2021, there is likely to be a decline in the purchase of properties.
Lower incomes:
As the furlough scheme retires at the end of September 2021, there will probably be a decrease in monthly incomes. Added to this, it is probable that unemployment will rise till the economy stabilises. This will have an effect on purchase of property.
Low interest mortgages:
Although this, in itself, acts as an incentive for buyers, it should also be remembered that the lower the mortgage interest, the higher the property price. Hence, in terms of the property price, the low mortgage schemes could result in exorbitant prices, acting as a deterrent for prospective buyers.
Immigration system:
With the free movement of people between the UK and EEA (European Economic Area) curtailed, there is likely to be a fall in the requirement of properties from people in those areas.
Conclusion:
With the above positives and negatives affecting the UK housing market, a definite prediction cannot be given. However, it looks likely that the real estate sector will continue to prosper.
The “bricks and mortar” investment has been resilient against all storms so far and it appears that it will continue to be so. However, only Time will tell and we await with excitement to see what 2022 will bring to the housing market.