Looking Back at 2021 & What Does 2022 Hold for the Property Market?
30th December 2021
30th December 2021
Summing up the 2021 property market, suffice to say that it has been ‘interesting’ and largely dominated by Covid and the Government and public’s response.
The Government’s strategy of creating a stamp duty holiday until September largely achieved its aim of keeping the property market flowing – and surprisingly, income raised by the Revenue for England and Wales for the first 9 months of the year was the highest since 2017 – dominated by revenue generated from transactions of properties over £1,000,000. This robust market performance has been reflected particularly in terms of price rises – in 2021, on average, values have risen 11.3% in the SW (according to Land Registry) and in some cases much more, as a growing number of people take advantage of being able to work from home and move down to the South Hams in particular. Specifically, the demand for family homes with outside space is likely to persist.
The prevailing backdrop is of price stability, in the short to medium term, created by a stock shortage with demand outstripping property supply quite considerably. This is exacerbated to a certain extent, as sellers have been reluctant to come to the market due to a lack of property to move to – thus creating a self-fulfilling market caught in a vicious circle.
‘How far into 2022 will these conditions last?’ you may ask. It’s a tricky question to answer, given that I am not Warren Buffet! However, it is likely that volumes will remain muted in the short-term with prices remaining firm, due to the prevailing stock shortage. There are signs, however, that people are starting to think about moving again – we are seeing a healthy uptick in valuations, as potential sellers start their journey. This would indicate a potentially busy Spring market, as liquidity returns.
The other issues to consider are largely economic, i.e. the low interest rate environment is being threatened by inflation created by supply chain and higher energy prices – resultant potential higher interest rates will provide competition for cash and so dampen property price rises.
The other major consideration in a rising price property market is that of affordability. Property price increases cannot be sustained if the economy suffers a post-Covid and Brexit contraction and income levels are not sufficient for people to afford inflated property prices. All these factors will, over a period, temper property price rises.
Notwithstanding all the above, anyone considering a move to take advantage of current conditions would be well advised to contact one of our local offices to get up to the minute advice and start early paperwork preparations – the ability to move quickly in this fast market is essential to compete in what is undoubtedly a ‘cash is King’ environment.