Onto The New Year
2021’s Final Market Update is Here!
It has been quite an unpredictable year. As a country, we have been locking up and down, vying for vaccines, but generally just trying to get on with things. The property market has been boosted, some say unsustainably, by the stamp duty update and houses are getting progressively more popular. Space has dominated the social consciousness, whether that be maintaining it from other people or seeking more of it in our homes.
As we covered in our November 2021 edition, the market has been busy. In fact, it has been the busiest market since 2007, with 1 in 16 privately owned properties have changed hands this year. This is a significant jump from the 1 in 20 properties exchanged that was seen in 2019 ‑ the last year the market was thought to be ‘normal’. This encouraged house price growth, which peaked in the summer, and while it is still up (increasing by 6.9%) the pace of the growth is starting to ease. It is believed by the end of 2022, the 6.9% figure will have reduced to a robust 3% growth.
Growth is not the same across the board. Due to the impact of Covid, London continues to underperform (growth-wise) compared to other large cities. Beyond that, even on a national level, the disparity between flats and houses is growing deeper. Flat price growth is sitting at 1.6%, whereas the 5-year average is 1.3%. House price growth is double its 5-year average with 8.3% growth compared to 4.2%.
Buyer motivation is set to dip due to higher mortgage rates in response to higher inflation, but demand is set to continue to outpace the limited supply, which is currently -42%. The relationship between these two factors means while house prices are set to continue increasing, the number of transactions might suffer a measurable hit.
Taking a Closer Look
Ultimately, in the short term, these are not things to worry about. Buyers are humans, and their motivations are often more nuanced than simply buying at the lowest rates. So, while it is worth making note of, on the individual, single property level, it is best not to take for granted that the data patterns will play out as expected. What can almost be taken for granted though, is that the post-holiday market will spike, with the new year bringing renewed enthusiasm for life changes.
So, if you are a potential seller looking to get in before the competition, December is the month to get everything ready to launch for early January.
Most importantly though, enjoy the holidays!
If you would like to have a chat about next year’s market, contact us HERE.