According to the Berkshire Hathaway HomeServices 2022 EMEA (Europe, the Middle East and Africa) Report, the vast majority (85%) of UK property professionals expect inflation to have an impact, with a notable one in three (32%) anticipating a significant impact. This figure is above the average of countries surveyed, which came out at 78%, and second only to Portugal which topped the table at 88% of real estate professionals who believe there will be an impact.
79% expect interest rate increases to have repercussions on real estate which could have the effect of slowing the market as first-time buyers struggle to get affordable mortgage deals.
The findings come as the UK Consumer Prices Index (CPI) rose by 5.5% in the 12 months to January 2022, up from 5.4% in December 2021 according to the Office for National Statistics (ONS).
When focusing on luxury real estate, 72% of experts believe that the rate of inflation will have an impact and 73% expect rising interest rates to have an impact, above the average of surveyed countries which put the figure at 68%.
With a significant proportion of UK real estate experts forecasting a knock-on effect from economic factors, other external forces were considered less significant, indicating confidence in the market. For example, nearly two-thirds (60%), the highest rate amongst surveyed countries, said global talent flows would have no impact, and more than half (54%) said that climate change wouldn’t have an effect.
Martin Bikhit, Managing Director of Berkshire Hathaway HomeServices Kay & Co, comments: “Whilst economic factors will undoubtedly play a key role in shaping the UK real estate market over the coming years, the sector continues to be confident and buoyant.
"This year we are seeing a very strong demand-led market as a result of the lockdown hangover. Although economic factors will have some slowdown impact, we’ve still got extremely low-interest rates which continue to be appealing for buyers at every point of their real estate journey.”
“We must also recognise the market has totally transformed,” Bikhit said. “In just a few years, we’ve entered a new era for real estate, with buyers embracing flexible lifestyles, and seeking homes fit for homeworking and with outdoor space. This desire to get a property which fits new ways of living and working could see the economic factor lessen.”
