Residential

Residential property prices look set to increase in 2022 and beyond, according to the latest forecast.

Strutt & Parker has predicted that house prices will rise by 7% next year in a ‘best case’ scenario, though it also made a ‘downside’ prediction of 2% growth.

These new figures indicate the pace of growth will slow as market activity settles following a buoyant market motivated by the stamp duty holiday.

By comparison, UK-wide house price growth reached 10.3% in the year to Q3 2021, the highest year-on-year growth seen since Q3 2014, with housing transactions over the same period reaching 442,930, the highest recorded since Q3 2007.

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Its predictions for Prime Central London (PCL) are however more positive and stand at 10% and 5% respectively. This follows the £5m-plus market increasing in Q3 2021, due to international high-net-worth buyers re-entering the market.

Guy Robinson, head of residential at Strutt & Parker, said: “The residential market has made a significant recovery in the last 12-months. This has been fuelled by high levels of demand across the market and attractive mortgage rates, while a rebound in the economy gave buyers and sellers confidence to trade up or down the housing ladder.

“Following significant house price growth year to date, rising at a rate that had not been seen for seven years, the outlook remains positive for 2022 and beyond. Buyer demand continues to be robust and applicant numbers are still significantly higher per property than any time since 2006.

“We are still seeing exceptional demand for family housing in the country with access to facilities and connectivity especially along the coast. That said, it is still unclear the extent to which the shifts in behaviour and lifestyles witnessed will materialise into permanent shifts in market demand. More time will be needed to adjust to these factors and there could be further corrections in the early part of 2022.”

Strutt & Parker’s PCL sales index data showed house prices rose by 0.7% from Q2 to Q3, up from 0.1% on the previous quarter. Year-on-year growth to Q3 2021 stands at 1.2% – the first time annual growth has surpassed 1% since Q3 2014 – however, PCL prices remain 20% down from their 2014 peak.

Louis Harding, head of London at Strutt & Parker, commented: “The first half of the year in PCL saw a record-level of transactions, supporting positive year-on-year growth. However, Q3 was unable to sustain or build on this momentum. As a result, prices have steadied in recent months and have yet to see the same rebound in growth as the mainstream regional market. However, we expect this to come through in the following 12-months as international travel resumes and pent up demand is released in to the market.

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“The market continues to be driven by transactions on properties over £3m, and in particular the house market, with prime locations, such as Kensington, Chelsea and Notting Hill, outperforming the wider PCL market, and these trends are likely to continue in 2022.”

Across the UK’s regions (excluding Greater London), between Q1 and Q3 2021 sales transactions were up 37.5% by comparison to the same period in 2020. Strutt & Parker’s analysis of housing transaction volumes reveal Scotland, the South West and East of England recorded the biggest jump in transaction volumes.

Kate Eales, head of regional agency at Strutt & Parker, commented: “Beyond London, we have seen every part of the UK outperform in terms of transactions in 2021, with coastal villages and the Cotswolds emerging as popular hotspots. The £500k- £700k price range continues to move fast and properties in this bracket are the most coveted. We expect this will continue and anticipate properties in attractive country villages with good connections and amenities to show the strongest growth in 2022.

“Going in to next year, less-traditional locations in the likes of Norfolk and Herefordshire could be the biggest winners as buyers become more confident being further from London, though we are yet to fully understand the impact of lifestyle changes for those moving out of the capital. One trend however that appears here to stay is more and more sellers are entering the regional markets, but supply remains constrained.”

By MARC DA SILVA

Source: Property Industry Eye

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After a record breaking year, the housing market appears to have peaked and is set to cool, new research shows.

The latest Reallymoving House Price Forecast shows residential property prices will rise by just 0.1% over the final quarter of 2021 as the post-pandemic property market settles into a period of slower growth.

Prices will rise 1.3% in October, but decline by 0.1% in November and 1.1% in December. Conveyancing quote volumes are also on a downward trend, indicating a drop in buyer demand.

Conveyancing quote volumes continue to decline steadily, falling 4% between August and September, further indicating that buyer demand is settling back down to more normal levels.

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Reallymoving captures the purchase price buyers have agreed to pay when they search for conveyancing quotes through the comparison site, typically 12 weeks before they complete. This enables reallymoving to provide a three-month house price forecast that historically has closely tracked the Land Registry’s Price Paid data, published retrospectively.

It is estimated that house prices will rise by 1.3% in October as a result of deals agreed between buyers and sellers in July due to continued strong demand post stamp duty holiday and the limited supply of new properties coming on the market, creating greater competition for homes. This will be followed by a marginal fall of 0.1% in November and a larger drop of 1.1% in December, reflecting a drop in demand from buyers in the late summer as the post-pandemic property boom began to subside.

Following months of strong growth, house prices will rise by just 0.1% in the final quarter of 2021, bringing the average house price to £335,924 at the end of the year.

The shortage of stock as reported by agents is supporting property prices as the market adjusts to the end of all stamp duty incentives and the end of the furlough scheme, with the prospect of an imminent base rate rise an added incentive for buyers to get deals done as quickly as possible and secure a fixed rate mortgage deal while low-cost deals remain.

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Rob Houghton, CEO of reallymoving, commented: “A return to slower growth and a steadier housing market is welcome, but there are a number of factors converging which could knock consumer confidence over the coming months such as the supply chain crisis, rising inflation and living costs, plus the prospect of increasing interest rates – though it’s too early to see their impact in the data yet. While the reduced supply of new homes for sale is making things difficult, buyers who are ready to move now are keen to press ahead and lock in a fixed-rate mortgage deal, helping keep their borrowing costs low.

“First-time buyers who have found themselves increasingly priced out of the market will be encouraged by evidence that the post-pandemic property boom is running out of steam, with prices falling over the final quarter in five UK regions and less competition for starter homes now that stamp duty incentives are over.

“For those who have held off making their move due to the frenzied market conditions over the last few months, now is a good time to buy and lock in a five-year fixed rate deal that will insulate them from any imminent rate rises and make it easier to ride out any short-term inflationary pressures.”

By MARC DA SILVA

Source: Property Industry Eye

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