Residential Sales Market Report - January 2022
2022 – A return to ‘normal’?
Sunshine and warmth heralded the start of 2022 across the UK as the property market ended 2021 on a high. After the unprecedented market conditions of 2020 and 2021, calmer weather is currently forecast for the property market in 2022, with hopes of a return to more ‘normal’ market conditions.
Ending on a high
Annual price growth and sales volumes in 2021 were at their strongest since 2006 and the market is poised for a stable start to 2022. Nationwide report annual property price growth in the year to December was 10.4 percent and HMRC recorded close to 1.4 million sales between January and November. Mortgage lending and approvals have also been at their strongest since 2007. Over 67,000 mortgages were approved in November, which, with the exception of 2020, was the highest November total since 2016. Mortgage approvals January to November were at their highest since 2007 and over 27 percent above the long-term average (Bank of England, 2011-2020). Sales activity remains higher than normal: the sales to stock ratio in November was 46 percent, compared to an average of 34 percent between 2017 and 2019 (RICS). Strong buyer demand is set to carry forward into 2022.
New Year’s resolutions are commonplace, and for many households this can relate to their property. Rightmove report valuation requests from homeowners were 19 percent higher as 2021 drew to a close, compared to the same time the previous year. This may be an indication that the supply/demand imbalance that epitomized the market in 2021 could start to ease. The Bank of England’s decision to raise interest rates for the first time in over three years in December to 0.25 percent is unlikely to cause many to reconsider any future move. However, cost of living increases due to rising inflation, and any further gradual rate rises will impact the amount new buyers can borrow relative to their income, particularly in markets where affordability is most stretched.
There is no denying that the Omicron COVID-19 variant is acting as a sharp reminder that the virus continues to impact on day-to-day life. However, the huge success of the vaccination program means that we start 2022 in a very different place to 2021. While some restrictions remain in place, these are a long way short of the full lockdown we saw this time last year. The new variant may continue to act as a stimulus for moving, but with many of the economic incentives provided to businesses now removed, any significant impact on the cost of living and levels of employment could well dampen activity.
Sellers entering the market over the coming months need an agent who understands and meets their needs. Confidence in their ability and good market knowledge continue to top the reasons why sellers chose their agents, and while for two-thirds of prospective sellers a pleasing valuation is important, just 17 percent include ‘lowest fee’ in their top five reasons (Dataloft, Property Academy Home Moving Trends Survey, 2021).
Although many prospective buyers and sellers still value a high street presence, the pandemic has undoubtedly prompted and accelerated new ways of marketing a property digitally. Home movers rate highly the ability to view websites on their mobile phones. Local housing market information and virtual tours, ideally on agents’ websites or on portals, are also in more demand, with over half of movers stating they would like these to stay or to see more of them.