Real estate market forecast 2022
A brief recap of the past year
2021 has been an exceptional year for the Scottish property market by any measure, with the effects of COVID-19 never far away.
We have seen a continued shortage of supply of new properties coming onto the market relative to buyer demand. This has put strong upward pressure on prices, with the Scottish market seeing large annual increases in house prices and shrinking lead times.
The year 2021 was also marked by the end of two major tax breaks: the tax on land and real estate transactions (LBTT) in Scotland and the Stamp Duty Land Tax (SDLT) in England. These tax breaks were intended to stimulate activity in the real estate market, but it turned out that the real estate market did not need much stimulation initially. The unprecedented pressure to ‘move forward’ property deals to ensure they ‘beat’ these deadlines has put extreme pressure on property lawyers across the UK and has left many unable to cope. Most property lawyers in the UK will be praying that there will be no more such tax breaks in the future!
As we look to 2022, we’ve collected our team’s predictions of what property buyers and sellers can expect in the year ahead. Here’s what MOV8 experts think will happen in 2022.
The impact of COVID-19 on the real estate market
New year, new variant, same request?
In March 2020, I predicted that the initial lockdown, massive uncertainty over job prospects and economic damage caused by the pandemic would hurt the real estate market and that we would see a sharp drop in real estate transactions and a decline real estate prices. I couldn’t have been more wrong!
Our post-lockdown experience in 2020 has been that demand for property has skyrocketed, particularly for homes and properties with outdoor space. This image has remained constant ever since.
Rightmove’s December House Price Index reported that valuation inquiries via its website were up 19% from the same period last year. Since an appraisal is the first step in selling a home, it indicates confidence in the market.
Will supply catch up with demand?
The low supply of new properties coming onto the second-hand market combined with very strong buyer demand has been a consistent theme throughout 2021. This is expected to continue into 2022.
The new construction sector makes up a significant portion of the real estate market, but COVID-19 has hit this sector hard, with the supply of building materials and significant staff shortages due to illness, meaning that a Lower than average number of new builds was released. on the market in 2021. This should also continue in 2022.
Confidence in the housing market remains strong, however, and the market has weathered one of the most seismic events in living memory over the past two years. Restrictions on our ability to spend, including less socializing and vacationing, have allowed more people to save for home purchases. With rising home prices in 2020 and 2021, existing homeowners have seen an increase in their home equity, which has allowed them to move up the ladder.
With such strong demand there has never been a better time to put your own property on the market. If you are interested in selling your property this New Year, contact us today at [email protected] or instantly book a free property valuation at https://www.mov8realestate.com/selling-property/free-valuation-of-your-property/ .
Will prices drop in 2022?
There’s no reason to predict that the real estate market will cool down in 2022 compared to 2021. That might not be the best news for home buyers trying to get a foothold on the ladder, but it is good news for real estate sellers.
Zoopla recently predicted an overall 2.5% increase in Scottish house prices in 2022. Rightmove predicts a 5% increase in UK-wide sales prices.
There will always be local variations and we anticipate that areas with well-rated schools will continue to enjoy high sale prices as well as areas that offer more outdoor space and are within commutable distances of cities and towns.
Economic factors and the real estate market in 2022
Inflation and rising interest rates
Rising inflation makes consumers less affluent and more likely to tighten their belts. This affects people’s ability to save money, including for a down payment to purchase property.
The Bank of England in December 2021 also announced an increase in the Bank Rate (often referred to as the “base rate”) for the first time in 3 years. Anyone with a follow-up or adjustable rate mortgage will likely see their monthly mortgage payment increase.
Higher monthly mortgage payments and less attractive mortgage offers, especially longer-term fixed rates, will deter some buyers. However, given the unprecedented demand in the Scottish property market, there is still a long way to go before this has a significant impact on property prices: the market is so competitive that it can currently afford a slight drop in the number of buyers. who can afford to buy.
Overall outlook for the real estate market in 2022
We are convinced that the real estate market will remain dynamic in 2022.
The fundamentals that have supported the market in 2021 are unlikely to change drastically: lack of supply, huge buyer demand, affordable mortgage products, reduced ability to spend money, increased work from home, need for space exterior and desire to treat yourself to something nice during a difficult time.
All of these factors combine to create a highly competitive landscape for real estate buyers and a very healthy market for owners and sellers.
We are here to help you
If you are considering buying or selling a property, MOV8 is perfectly placed to help you. Our team of 5-star real estate experts can help you through every stage of the ownership process.
If you are considering selling your house or investment property, contact us by calling 0345 646 0208 (Option 1) or emailing [email protected] to arrange a free valuation of your home or to obtain complete and transparent ventilation. cost of selling your home.
If you are looking to buy a property as a home or investment, please call 0345 646 0208 (Option 2) or email [email protected] and we will be happy to help.
This article has been brought to you in association with Mov8