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UK housing market 2022: A buyer’s market or a seller’s market?

In 2021, the UK housing market saw the purchase of a whopping 1.5 million houses which is said to be the highest purchase number since the global financial crisis. According to the Office for National Statistics, the average price of a house in the UK in November 2021 hit a high of £271,000, which is essentially a 10 per cent increase since November 2022. According to most experts, pent up demand, the introduction of stamp duty holiday, the limited supply of houses and low mortgage rates is the reason for this sharp rise in property purchases.

A growing population coupled with the increase in the number of buyers is what is driving the UK housing market. With the imbalance between demand and supply, the average price of property is increasing at a shocking rate. In fact, in November 2021, 38 per cent of the houses in the UK were sold for more than the asking price, which is a certain nod to the rising demand and limited supply. Will this trend continue in the coming years? What is the future of the UK housing market in 2022? This is what the Clapham estate agents have to say about the UK housing market in 2022.

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Buyer competition

With almost one-third of the houses in the UK being sold above their asking price in 2021, many experts believe that 2022 will continue to be a seller’s market. Due to a rising supply, essentially thanks to all-time-low mortgage rates as well as the rising demand from first-time buyers, sellers seem to have the winning hand. As more people are working from home, the demand for the “right home” has certainly increased among buyers. Since individuals are spending more hours at home, homeowners, as well as potential buyers, are looking to upgrade their homes and their lifestyle, which is what has led to this significant increase in buyer demand in 2021; most experts believe that this trend will continue in 2022. According to Battersea estate agents, the competition among buyers has never been higher, with many buyers willing to pay a premium to buy their dream home.

Change in buyer preferences

In ‘prime areas’ such as London, the average property growth price has decreased by a whopping 4.2 per cent thus reaching a six-year low. Again, this has a lot to do with the change in buyer preferences. Since people no longer have to worry about commuting to work, many homeowners are making the shift from the city to the suburbs. In 2021, the UK housing market saw a vast spike in the demand for properties in the boroughs and the suburbs, as these properties were more spacious and relatively cheaper. In this case, the buyer’s had the upper hand as they were able to pay less for more. If the shift in house preferences continues in 2022, we could see a huge demand for properties in the suburbs with a drastic reduction in the demand for city centre properties.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

The race for space

Covid-19 has certainly had its impact on health, work, travel, as well as the housing market. As the ‘race for space’ continues, even as the months go by, the number of potential buyers that are looking for spacious homes with home offices and outdoor spaces will continue to increase. As demand increases, most sellers are left asking an important question: how much is my property worth now? However, most experts believe that the introduction of affordable housing in the early months of 2022, which is already in the pipeline, will certainly lend a helping hand in reducing the average growth price. Despite the end of the stamp duty holiday in September 2021, the demand for property continued to remain at an all-time high, with Christmas and New Year seeing some of the most fast-tracked property sales.

‘Normalising’ mortgage rates

To boost the buyer’s confidence and help the housing market, the UK government decided to reduce the rate of interest. But, as the economy normalises, so do the rates of interest. With approaching inflation and an increase in the cost of living, the Bank of England will soon start to feel the pressure, which in turn will lead to increased mortgage rates. While most buyers might not be impacted by the staggering increase in interest rates, some buyers will certainly feel the pinch.

All in all, experts feel that the housing market in 2022 will continue to see a growth in prices, but at a slightly modest rate. Essentially, 2022 seems to be a seller’s market, but the buyer could have the upper hand once the supply catches up to the demand.


Source: News Anyway

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Mortgage rates fall as choice rises, according to the latest Moneyfacts report

Continued growth in product choice for borrowers, in addition to rate competition, has led to reductions in overall average fixed rates month-on-month, according to the latest Moneyfacts UK Mortgage Trends Treasury Report data.

Nine months of consecutive increases in mortgage availability has seen total product choice reach its highest level in 16 months, with 4,512 deals on offer.

This is an increase of 269 in the last month alone, and the highest this has been since March 2020, when the figure was 5,222.

This is the first time since June of 2018 that Moneyfacts has recorded availability increasing across all the individual loan-to-value (LTV) tiers.

Borrowers seeking higher LTV products have seen the largest improvements in choice, particularly at 95%, where the research recorded a jump of 61 products compared to June 2021, while the current total of 253 available deals offers 239 products more than there were this time last year.

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For only the second time in the past 12 months, both the average overall 2-year and 5-year fixed rates fell over the course of the month, to 2.55% and 2.78% respectively.

Reducing by 0.04% in both cases, these are the largest monthly reductions recorded for either rate since June 2020.

July 2020 logged record lows of 1.99% and 2.25% for these rates, due to the dearth of available deals fuelling these averages, particularly at the higher-rated, higher-risk top LTV brackets.

Eleanor Williams, finance expert at Moneyfacts, said: “The level of choice available to those looking for a residential mortgage has risen substantially again between June and July, as volumes rose by 269 new products bringing the total available to over 4,500.

“Over the past six months alone availability has recovered by 1,619 – or 56% – and for the first time in over three years, we tracked improvements in choice across all the LTV brackets this month, great news for borrowers with all levels of equity or deposit.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“Our data shows there is further cause for positivity as both the overall average 2 and 5-year fixed rates have fallen.

“At 2.55% the average 2-year fixed rate is at its lowest since February (2.53%), while the average 5-year rate at 2.78% is the lowest since April (2.77%).

“Although the 2-year overall rate is 0.06% above its equivalent rate from a pre-pandemic July 2019, the 5-year overall average rate is 0.07% below its equivalent two years on (2.85%) and could indicate lenders are moving to price longer-term fixed rates more competitively, perhaps reflecting a shift in borrower focus to locking in for stability in these uncertain times.

“First-time buyers and those considering a mortgage at higher LTVs are amongst those to benefit the most from rate cuts, with the average 2 and 5-year fixed rates at 90% LTV falling by 0.15% and 0.08% respectively, while at 95% LTV reducing by 0.09% and 0.06%, respectively, but equally it is impossible to ignore the growing ranks of providers offering sub-1% deals to tempt borrowers with larger levels of equity or deposit as well.

“According to the latest Halifax House Price Index, there was a 0.5% drop in property prices, likely linked to the stamp duty holiday tapering off, but this in no way detracts from the fact that overall prices are up approximately 8.8% on a yearly basis.

“Demand for the very limited supply of property could remain high, as the appetite to either get onto the property ladder or for larger properties with home offices and outdoor space continues, and these borrowers could be enticed by the possible savings lower mortgage rates may bring them.

“Competition is evident across the residential mortgage sector, but there is no guarantee that rates will continue to fall, or for how long these record-low deals may be available for, therefore seeking advice to assess the best true cost deal for their own circumstances would be a wise move by any prospective borrower.”

By Jake Carter

Source: Mortgage Introducer

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