Back to Balance
Presenting November’s Round-Up Blog
Welcome back to our monthly market retrospective, now written in the wake of a new budget and anticipation for a new year. We hope 2021 has been and continues to be a time of growth for you, as it has been for us. But without further ado, let’s discuss what the market has been doing since our last report.
It is always good to celebrate even small changes, and so we are happy to report that the 6.1% price growth that we had seen nationally over August has now risen further and sits at 6.6%. This momentum is brought about by a number of combined influences: the re-evaluation of living space brought about by lockdowns, low mortgage rates, and the lingering effects of an extended stamp duty holiday earlier in the year. Another thing to consider is the imbalance between supply and demand, with demand up 28% and the flow of new supply down by 8%. All of these things have contributed to price inflation, but a return to sustainable levels of growth is expected in 2022.
Though 2021 sales are set to exceed 2007 highs of 1.5 million property transactions, it is expected this number will drop to 1.2 million in 2022. Alongside that, it is expected that the 6.6% figure will gradually diminish to a 3% rate of increase of house price growth. The consensus is that there will not be a cliff-drop in demand, as some may fear, but that certain 2022 changes will marginally restrict buying power and slow the rate of price inflation.
Changes, Challenges and the Future
One of these changes is the international growth of currency inflation, deemed by Chancellor Sunak as a problem that we cannot tackle alone (read more about it HERE). Another is the expected rise in mortgage rates, which despite having been in overall decline for decades, is expected to rise next year. And finally, the cost of living is expected to see a modest rise as well because of increased taxation in the 2022/23 tax year.
These challenges to price growth are not enough to cancel out the momentum of this record-setting year for the property market, especially with higher prices and higher demand incentivizing homeowners to sell. But they are worth keeping in mind as the price growth begins to slow: the housing market will not be in decline, it will be returning to balance.
But while forecasting is useful at setting expectations, it is always worthwhile to cast a glance back. Here are a few quotes from the team about 2021 so far:
‘Unexpected, unprecedented, and exciting. What a year 2021 has turned out to be. Demand for property across the country, especially London, has been something which no one could have predicted. Across the Stamp Duty deadline, properties sold at a record pace but still with sensitive pricing within the London market. In the market we are seeing currently, flats are a harder sell than houses, with lockdowns from the pandemic having a monumental impact on people’s perspective of how they wish to live.
Homes with outside space also take presidency over those without. Within 2022, we expect to see home buyers move back into London with the market taking an upward turn with the slow return to ‘normality’. Throughout this time, our approach has been bespoke and we have offered high service levels for our clients. We will continue to proceed with this and grow in strength moving into 2022.’
‘2021 has been a year of learning how to live with a new normal. Whilst Coronavirus is now an established part of our lives, we have had to adapt to working around it. There has been no cliff-edge in terms of demand falling, and demand for houses in particular has built in the last 18 months, driven by a number of factors.
We expect the property market to return to more normal levels in 2022, rather than the peak of 2021, assisted by the Stamp Duty Holiday, and we expect to strengthen our offering for our clients and consolidate our position as the best new agency in the area.’
‘2021 saw the likes of the highest average property price on record in London at a staggering £525,893, as well as a +56% increase in buyer demand and for EO Estate Agents, a whopping average of 99% of asking price offers for our vendors over the last 8 months.
We have found it to be an extremely busy and rewarding year so far and due to the house price gains we have already experienced this past year and the predicted +3% increase in house prices in 2022 we anticipate seeing more sellers take to the market in an effort take advantage of the great demand. We at EO are as eager and motivated as ever to assist all of our clients in achieving the best price possible in this continuously buoyant market.’
If you would like to discuss the market further, contact us HERE.