With so much instability in both pandemic and the economy, it’s understandable that forecasts from the experts vary, but what appears to be the common expectation is that due to a lack of stock and the likely increase in interest rates, sales and property values will slow down from record sales and property values of 8-10% across the country.
It is important to remember that certain unprecedented factors contributed to this boom: stamp duty freezes and historically low interest rates.
What have the experts forecast?
The property firm Savills expected to see a growth of 6% in prime London neighbourhoods, up from 3.2% in 2021, and expect a rise again for flats in prime areas, as people begin to return to the city looking a pied-à-terre.
One of the biggest mortgage lenders, Halifax, expects price growth to slow considerably as a result of rising living costs (inflation). It forecasts price growth of zero to 2% in 2022. This compared with increases of 8% recorded so far this year and 6% in 2020. It estimated the average house price in December at £272,992, almost £34,000 higher than at the start of the pandemic.
The property website Rightmove and Zoopla predicted house prices to rise by 5% nationally and 3% in London, both forecasting 1.2m transactions, down 20% from 2021 but still in line with the average number of transactions over the last five years.
Our forecast here at Eureka Property is London-focused; with little stock and slightly higher interest rates but competitive and new mortgage products on offer, Savills, Rightmove and Zoopla’s forecast for the capital slowing with a growth of 3% value seems in line with the data being presented and what we have seen on our books in the many years we have existed. This will bring us back to more stable levels of activity and interest rates. Therefore, purchasing a new home as a first-time buyer or investor will be as it was prior to the pandemic. The big change we might see is in the mortgage products being offered; we are already seeing evidence of this with 35-40 years being offered, rather than the usual 25-year plans, and it is highly unlikely lenders will turn away from first-time buyers with small deposits in 2022.
We have a trusted set of mortgage and financial advisors here at Eureka Property, and we always welcome any questions you have. Please feel free to call us on 0208 888 2288.