Covid-19 has hit every part of society, including the housing market. During every lockdown since 2020, buying and selling a house became if not impossible then certainly incredibly difficult. Personal viewings were off the table, the building industry slowed to a crawl so fewer new-builds came onto the market, and everyone braced themselves for a truly epic explosion as the property bubble burst.
However, after the dust settled and things started to get back to the ‘New Normal’, it appeared that the property market was more robust than people gave it credit for. Far from imploding, it has actually shown signs of growth. And it looks like that growth will continue into 2022, with predictions that the UK property market will see its strongest year since 2007.
UK Property market bounces back
While the industry may have flatlined at the start of the pandemic, by 2021 it was well on the way to recovery. In fact, according to online estate agents Zoopla, UK home prices swelled by nearly 7% in October alone, banishing fears of negative equity and a burst property bubble. The average home now sits at around £240,000, up £40,000 from 2016, according to the Zoopla UK House Price Index Report. Nearly half of that increase occurred during October 2020 and October 2021.
And far from being a quiet year on the real estate front, Zoopla estimates that around 1 in 16 homes will have been bought and sold by the end of the year. That makes 2020/21 the busiest year in the housing market since 2007.
Where are the boom areas?
Ironically, London is being left behind when it comes to the property market. The pandemic saw a change in focus for many people, especially as they discovered that remote working was not only feasible, but offered them a far better work/life balance. So it’s the out-of-town areas that are seeing the fastest growth, with the northwest, northeast and Wales leading the charge. For those who simply don’t want to give up on city living, Liverpool, Manchester and Sheffield saw the greatest increases in house prices, ranging from 10.6%, 8.7% and 7.9% respectively. Wales saw the biggest regional increase in house prices at 10.8%.
What’s driving the prices up?
Put simply, supply and demand. The building sector has undergone one of its most challenging periods in modern history, but the level of demand has continued to rise. The percentages just don’t marry up, with demand in October 2021 nearly a fifth above that of the five-year average. In the meantime, housing stock (properties available and on the market) dropped 40% below the same five-year average. Although the building industry is slowly starting to get back to normal, there’s a big lag in the number of new-builds coming onstream, which means competition for existing housing stock is much higher than normal.
2021 – more sustained growth
The question that everyone wants answered, though, is will this level of growth continue into 2022? Indications are that, while the surge through 2021 has led to the most buoyant year since 2007, the growth will be more sustainable and perhaps a little more controlled through 2022. The climbing prices have slowed a little towards the last quarter of 2021, which will mean that growth in Q1 and Q2 2022 may demonstrate more restraint. Turnover may increase slightly after the holiday season, but the emerging Omicron variant still might put paid to any excessive growth. The building industry is still playing catch-up when it comes to new stock, but that won’t stop keen home-buyers from buying off-plan, for example.
The exodus to the countryside from the nation’s cities may continue (especially as faster broadband speeds make homeworking from genuinely remote locations far more practical), so it may be that prices in the countryside show a more positive uptick when compared to city properties.
The bottom line is that property continues to be a smart investment and watchers believe 2022 will show sustained growth of up to 36% for the year. However, as Covid-19 has proven, nothing is set in stone, and those predictions could change by the month. It makes selling a property a tricky balancing act, and one that will certainly not be any easier even if the ‘New Normal’ does put the UK back on track.
Whether you are buying or selling a property, our North London based Property Lawyers can provide expert advice and ensure your interests are fully protected.
To make an appointment to discuss any aspect of residential property law please email or phone 020 8349 0321.