With coronavirus as rampant as ever and constant government intervention, a valid prediction of the property market today can change tomorrow. I briefly want to cover what we might expect going into 2022; if that is even possible?
We have witnessed a softening of the market at the back end of 2021, no longer are we seeing properties go online and selling the same day (I understand there are probably pockets of exceptions to this) - properties are now on the market for more realistic timescales - things have calmed down: just walk into an estate agents today, compared to 2 months ago, not quite as smug.
So where does that leave us now? Kind of an obvious one but….Interest rates are more than likely to go up. Why? In simple terms inflation at the time of writing remains at 5.1% yet true inflation in utilities and food is more in the region if 9% - how does this get reduced? By increasing interest rates. We may not witness world-shifting figures with the current base rates at 0.25%, this is unlikely to move by a whole % but this might look more towards the 0.75% mark by the end of this year. Whilst for my own personal property portfolio I was still looking at 2% fixed in 2021, I personally will be looking to fix for 5 years for going forward(again, just my personal opinion - this is not financial advice).
Secondly, within the market we have seen a mad rush in the last 12-15 months due to it playing catch-up, driving demand and therefore prices higher (10% over the last year). I feel that rate of same will drop off by between 15-20% this year.
Will we see the same drop for house prices? I feel that this is unlikely due to the huge and sustained imbalance between supply and demand. The housing shortage has been consistently around one million units and with this lack of supply, has naturally increased the price of stock higher and not helped by a growing population. There may be a correction on the upward trajectory, but prices are still likely to increase - not at the dizzying 10% growth we saw last year but more likely in the regions of 3-5%.
Just my opinion; what do you think will happen in the property market in 2022?
Graph source: The Guardian
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