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Mortgage advisers: what does 2022 look like for the sector?

Will 2022 see the return of some stability to the housing market, or is unpredictability the new normal?

You don’t have to look very far to find the biggest influences on the property sector over the last couple of years.

Covid brought major changes to our daily lives, while the stamp duty holiday stimulated a faltering market.  

The pandemic altered many people’s perception of just what their home is for. The huge and rapid rise of homeworking inspired many to search for that extra room or find the flexibility that comes with more indoor and outdoor space.

The growing trend towards an ‘escape to the country’ escalated too, with many buyers seeking an alternative to high-density urban living. 

This mix of new priorities and no stamp duty generated a record-breaking number of property transactions in 2021, sparking a frenzy of activity among buyers, movers and investors.  

It’s tempting to see all this as a temporary blip in unusual times, but is this true? Are these new patterns here to stay and what will happen next? As a mortgage adviser you want to see as far along the curve as possible… 


What prices are we looking at in 2022? 

The property portal Rightmove predicts a 5% increase in average asking prices during 2022. This adds around £17,000 on average to the value of a property.

The site has also seen a 19% rise in requests for estate agent valuations in recent months, which would indicate an increase in available properties in the new year. This will increase choices for prospective buyers, and keep the market buoyant and busy – probably a lot like last year.  

In the rental sector price rises also look likely, powered in part by a lack of good properties for rent. This supply gap is connected to the healthy sales market, as landlords choose to take advantage of the boom and cash in. We’ll probably see a rise of at least 3% across the country, with ‘hot spots’ reaching up 10%.


Where are we growing?  

As ever, the property story is not the same across the whole country. There are marked regional variations. In 2022, it looks likely that the North West, Midlands, East Anglia and Essex will experience above average price rises and rental growth. These areas simply deliver more for your money and meet the demand for extra space.

In some areas of the North and Midlands, investors are enjoying preferable mortgage deals too, maximising returns on their investment, adding to the growth emphasis in these parts of the UK, especially in the still healthy buy-to-let market. 

Countrywide, the potential for buying away from traditional high employment centres remains, because many employers are sticking with remote and hybrid working for the future. Without the need for office space and the daily commute, less well-connected towns and villages are appearing on the radar of tomorrow’s house buyers. 


Build-to-rent potential 

There’s been a dramatic rise in the number of build-to-rent properties in recent years – homes built for long-term renters.

In 2022 this area is set to strengthen and diversify further, with big names such as Lloyds expanding their property portfolios into residential builds. Currently, there are not enough properties to match demand, and so it would be a shrewd choice to invest in this future growth market now.  


The London story 

London’s property market is and will always be different to that of the rest of the country. In recent years it has grown more slowly and buyer demand is not as high.

Partly this is down to the post-Covid desire for space and perceived better quality of life beyond the city limits. And with homeworking reducing the importance of commuter links to business districts, the case for living in the capital has weakened for some. 

Being London, the story is complicated and nuanced. Within the city there are big differences between areas.

There is such a diversity of housing and environments across the boroughs – hot spots and neighbourhoods in less demand sit side by side. Local knowledge is priceless. The greater number of international buyers adds further unpredictability to the mix. 


Economic health  

It’s not clear how quickly our lives will return to normal right now, with the situation regarding the global pandemic still uncertain in light of new strains of the virus and renewed restrictions. But we can be confident that at some point before too long – largely due to the long-term impact of the vaccine rollouts – the economy will regain its momentum.

Even in the heart of the pandemic, employment rose, and in the property market, virtual home viewings have proved hugely successful – especially in times of restricted movement. 

There is a great deal of pent-up demand for property, and once real economic growth is re-established, it will fuel the housing market. 


Notes of caution 

Not all the signs point to rampant growth and price rises. For example, the prospect of higher mortgage rates in the year ahead could slow sales.

Living costs in general are also on the rise, as are taxes. Another factor that might blunt sales is unrealistic, inflated pricing. This tends to occur in a confident, growth market, where demand is outstripping supply and owners have a somewhat rose-tinted view of their property’s true worth. 

So, is there really any danger of a dramatic crash or sudden drop in demand? It seems highly unlikely. It’s simply that a combination of these elements might make the near future a little less frenetic than the recent past. 


More of the same? 

If the extraordinary events of 2020-21 have taught us anything about the residential property market and the immediate future, it is that it remains a robust, resilient asset class. This has to be good news for buyers and sellers, as well as investors in buy-to-let property.

There are – as ever – unpredictable factors, such as interest rates and wider economic performance, but 2022 should prove to be a busy, fruitful year for mortgage advisers. 

Visit the news section on our website to find more articles to help you build a picture of the property market in 2022.

You’ll also find more relevant news and insights on our social media channels.

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If you found this article helpful, you might also find our article on marketing strategies for mortgage brokers informative, too!

About the author
Kate Morgan
Kate Morgan
Kate has written for leading publications and blue chip companies over the last 20 years.

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