What will happen to the property market in 2022?
Predicting what will happen to the property market in 2022 isn’t easy. It’s not a simple case of looking back at the property market influencing factors of the last couple of years and basing the 2022 prediction on a ‘much of the same’ theory. Factors such as the ‘end’ of the pandemic, spiralling inflation rates, government policies and global societal pressures will all influence the 2022 property market.
It is however, still important to start by looking back…
Why has the housing market been so strong?
The 2020 property market witnessed a massive ‘we need to move’ demand. Pent up frustration caused by lockdowns, coupled with the benefit of the stamp duty holiday fuelled a ‘great pandemic escape to pastures new’.
It didn’t stop there! 2021 saw the strongest home buying activity since 2007, especially given the impact of COVID.
A pandemic-imposed short property market shut down at the start of 2021 led to predictions that home sales would slump, but the reality was actually very different.
A strengthening and a pressing resilience on most property prices continued, some people chose to buy as a direct result of the pause on stamp duty and its imminent end in September 2021.
Quarter Four 2021 Property Market
Although the property market continued to price strongly, we saw an increasing number of people saying to us “can you come around and appraise my property, I think house prices may be peaking”.
Who made up the 2020-2021 property bubble?
The dramatic increase in home movers in 2020-2021 saw swathes of people hit the market that would otherwise not have done so. Mostly due to the reasons mentioned above, as well as others forced into a move due to financial difficulties.
A key point to note is that these may have been movers that would not have otherwise moved or would have been completing in 2022 and possibly 2023.
Localised property price variation
In Hitchin, certain roads took a real hit in demand a year to 18 months ago – The classic two up two down in and around the station. For the past 10 years these have been one of the most in demand property types in the area, seeing the best growth.
Why the hit in demand?
6 to 12 months after Covid hit, DINKS (Double Income No Kids) early 30s London commuting couples, weren’t earning. Many lost their jobs or were furloughed, which made them effectively, unmortgageable, hence the commuter properties dropped in demand. However, it seems that this market is in the early stages of recovery, so is starting to come back.
Conversely, the property market saw an incredible overheat on family three or four bed semi/detached properties, especially if they had a good size garden or indeed any garden. This was because everybody was bracing themselves for spending another prolonged period home.
For example, if we listed a three or four bed house in a desirable area of Hitchin, we would expect 15 to 20 viewings. We would also expect to receive multiple offers, ending in a final and best offer situation and a price way above asking price. Hitchin has seen upwards of £50,000 above asking price sales.
Are new financial implications going to alter the desire to move?
The pricing momentum that was caused by the lower supply levels and greater demand, could change and have a significant impact for future pricing, potentially mid to late 2022, because there simply may not be the demand to absorb it.
Obviously, it is incredibly difficult to predict the timing, but, in the coming months more people may experience some financial challenges due to:
- Raising of interest rates
- Increased inflation on food and fuel
- The pandemic still being around
- No help from government in terms of the stamp duty holidays, furlough etc.
For example, a restaurant owner, previously able to afford a £750,000 house, may have not been able to work properly for a long time.
Across a wide range of industries, people have simply not been able to earn their previous salary, and this has been compounded with inflation-based budget constraints.
So, we're conscious that the property market could change very easily, simply because people’s circumstances have changed. The reality of Covid, Brexit coming home to roost etc. are certainly having an impact from a financial perspective.
Is the property market stabilising?
As mentioned, a year ago, we thought it was all going wrong and prices were going to decrease. But the property market kept going from strength to strength. To anyone on the outside, it could appear that it just keeps going until the moment the music stops.
Predicting the exact point when the property market will change is almost impossible, even statisticians at UK Finance can’t realistically tell that the music has stopped for a few weeks.
It’s also important to understand, that for all properties, flat, terrace, semi or detached house, the timeline is always slightly different. It doesn't really matter what market you're in.
Having moved to the country, towns and villages due to Covid, the property market is already slowly coming back in London. And the reason is simply because people are getting used to living with Covid. London will always recover from a property market storm.
In the coming months, there is a potential that country-wide demand could reduce, due to:
- The stamp duty holiday ending back in September 2021
- The pandemic lead rush potentially ending abruptly
- Those that had previously planned to move in 2022/23 have already moved
- Demand equalises, going back to the pre-covid environment
- Stock levels could potentially rise due to as the tightening on personal finances from inflation and interest rate increases, impacting on the affordability of current homes;
- Resulting in an increase in the number of people needing to move to a more affordable property
At the point of stabilisation or change, people coming fresh to property market with their hopes of selling their homes for top money will need sound advice and guidance.
How long should it take to sell a house in the 2022 property market?
The reality is, anybody who's on the market for more than four to six weeks, probably needs to be asking whether or not their estate agent is doing the right thing. They also need to consider if their asking price is the right price, especially in the 2022 property market.
Any property that's appropriately marketed in today's property market, should be generating viewings and offers, certainly throughout 2022.
There should be viewings in the first four to six weeks and certainly, if it's not under offer, within six to eight weeks. Then it begs the question; Is the guide price correct? Very often the answer is no.
The reality is there are two reasons why a house doesn't sell:
- The asking price is too much
- The estate agent isn't doing the job correctly
It can't be anything else, it will always boil down to one of those two reasons.
What to look for in a good estate agent in 2022
Property market variation and change is likely to take place in the 2022. As experienced estate agents serving Hitchin and the surrounding areas, we believe that the property market might be heading into a position whereby vendors and purchasers need sound advice. They will need an estate agent that understands not only local market variations, but also the market as a whole.
In changing property markets, unfortunately, agents in this industry who don't ‘negotiate’, simply become the ‘messenger’. These less experienced estate agents eventually lose their clients’ trust.
A pivotal factor in the successful sale or purchase of a property will be working with an estate agent that has first-hand knowledge of more challenging market conditions. They must be able to prove they have experience of helping people through the process and show they are able to negotiate.
It is worth remembering that you can move when you want to move, and can still get the best price possible. If you are moving locally, it makes no difference whether the prices are going up, down or staying the same, because whatever happens to your house, in turn will happen the one you want to buy.
2022 Property Market Predictions
In summary, we believe the property market could see substantial change in 2022:
- Housing stock levels could increase
- Demand will ease
- Interest rates will go up
- Pandemic impact will reduce
If there's more stock available there's more choice, so you don't need to put yourself in a position of panic as a buyer or seller.
A changing property market shouldn't deter you from a move, it shouldn’t make any difference.
