One of the country’s leading agencies says the recent and expected interest rate rises, and the surging inflation, will not blow the housing market off course.
Strutt & Parker says its forecasts for 2022 remain unchanged - mainstream UK average property prices remain on course to grow by up to seven per cent, and up to 10 per cent for Prime Central London.
Guy Robinson, the agency’s head of residential, says: “Despite the current challenges in the market, the sector remains very robust and we are optimistic for 2022 as we expect to see a very competitive market this year. The impact of the challenges are likely to unfortunately impact aspiring first time buyers rather than current home owners.
“With demand continuing to outstrip supply, the extreme shortage of stock will sustain further house price growth.
“One of the main drivers of demand is the continued shift in individuals’ requirements of homes and locations. As a result, the regional housing market has seen strong price growth, driven by large demand and low stock availability in the regions. Commuter towns are retaining their popularity but with many employers still working to hybrid models, this is opening up more buying options beyond traditional high employment areas.”
For Prime Central London, Strutt & Parker’s sales index data for Q4 2021 showed record quarter on quarter growth of 0.7 per cent and year-on-year growth to 1.8 per cent.
“The rises in interest and inflation rates are unlikely to have an immediate impact on house prices as we have not seen a reversal in the behavioural shifts seen as a result of the pandemic. Therefore the shortage of stock and high demand will to have an impact on house price growth and our forecast reflects this” explains Vanessa Hale, head of residential research and insights at Strutt & Parker,
Across the UK, current sales stock volume is down 30 per cent year on year and the average time spent on the market (excluding London) has decreased by 11 per cent on 2021 and 24 per cent on 2020, highlighting the competiveness of the market.
The greatest differential in terms of applicants compared with stock is seen in Exeter and Norwich, two areas that have consistency experienced high levels of interest in the last two years.
Other competitive markets across the UK include Guildford, Inverness and Newbury, with last year’s applicant numbers up 68 per cent on average compared with pre-pandemic levels.
Kate Eales, Strutt’s head of regional agency, comments: “Outside London, we expect buyers to adapt to this very competitive market. With buyers looking for value for money and considering the next town along to hotspots and researching lesser well-known areas that have plenty to offer. It’s not just space that buyers dream of, a good community will be a strong factor with local pubs, independent shops, transport links and schools continuing to drive popularity.
“We are also expecting more buyers to consider a move to the coast. Coastal areas are a popular location for people looking to move in the next five years. The desire to live near the shoreline saw a dramatic increase – from only four per cent stating it was their current area to 18 per cent saying it was a future area they desired to live.”
The estate agency’s five year forecast estimates price growth in the UK with a best case of 30 per cent, and 20 per cent downside risk. Prime Central London’s forecast remains at best case of 35 per cent growth, and 20 per cent downside risk.