This is according to Nicky Stevenson, MD of Fine & Country UK, who adds that 2022 is likely to prove calmer, but after 2020 and 2021, few would wish to predict the market a year from now.
Stevenson says: “This year has proved to be a year of twists and turns. The country began the year in lockdown, but demand for property flourished as spring took hold. Sales records were broken, and demand continued apace, with buyers eager to benefit from the stamp duty holiday. Over half a million purchasers benefitted from 0% property taxation in the first nine months of 2021.
“Gardens, more space and quality broadband topped the wish list for buyers, with a shortage of supply strengthening price growth. Underpinned by the huge success of the COVID-19 vaccination programme, ‘normality’ resumed, albeit for many the daily commute has been consigned to history, with hybrid working patterns becoming increasingly common.”
She continues that the economy has proved resilient, with the impact of the end of furlough being less significant than predicted, and consumer confidence bouncing back to pre-pandemic levels over the course of the year. However, the impact of price rises on household incomes makes an interest rate rise likely and the developing situation with the COVID-19 Omicron variant will be monitored closely.
She comments: “As the end of the year approaches, demand in the market continues to be stronger than usual, although sales volumes and mortgage approvals have fallen since the final stamp duty holiday curtain fell at the end of September. The Bank of England report 67,199 mortgages were approved in October, the lowest monthly total since June 2020, but on a par with the monthly average witnessed between 2015 and 2019. A shortage of homes for sale, and new supply, particularly houses, continue to limit choice for those needing to move, although Rightmove report a 14% year-on-year increase in property valuation requests, a sign of building momentum.
“Annual property price growth remains in double digits in the year to November, although the consensus forecast for 2022 is for growth to pare back to a more stable 3.8%. Such growth is in line with the 3.9% rise in earnings predicted over the course of 2022 by the Office for Budget Responsibility. Inflation is anticipated to place pressure on consumer prices in the first half of 2022 and an interest rise is predicted, possibly when the Bank of England Monetary Policy Committee meets before the end of this year, or early next year.”
Stevenson notes that the average price of a prime market property in England and Wales is now over £1.15 million, a year-on-year increase of 6%.
She says: “Activity levels in the million-pound market have soared. The Land Registry has logged over 18,000 property sales priced £1 million or more over the past year, of which over half have been outside the capital. This compares to just 41% in 2018/19. High-value areas outside of the capital have seen a swath of activity, with 64 locations seeing fifty or more £1 million+ purchases over the past year, compared to just 44 in 2018/19.
Stevenson concludes: “While the proportion of sales in the prime market heartlands of London and the South East has fallen, sales volumes in areas including the East of England and the South West have soared. The majority of sales outside of London are for large, detached properties offering close to 3,000 sq ft of space, while premium apartments and converted terraced properties account for two-thirds of the market in the capital. The opening of travel corridors in recent months led to an increase in overseas purchases, and according to HMRC, 5,500 property sales have been subject to the additional 2% surcharge for foreign buyers introduced in April.”
