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Faulkner’s forecast

As the dust settles on 2021, our property prices expert considers what 2022 might bring for the home moving market.

Kate Faulkner

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After the nightmare of 2020 – the arrival of the pandemic, lockdown, furlough and all that came with it, we had the largely unexpected early opening of the market in May, and the definitely unexpected surge in demand and supply of homes to move. By the end of 2020, we moved around a million people, despite the lockdown.

The moving market then gathered pace in 2021 with more and more people wanting to buy and sell. It’s expected that through a tremendous effort from lenders to brokers, agents, legal companies, surveyors, the removal industry and many others that supported people’s moves, we will have moved 1.5m households, who, hopefully, had a much happier Christmas and New Year than they were able to have in 2020.

Will the older, more wealthy property owners continue to drive the market?

But what’s expected for 2022? Predictions are that we should effectively go back to the relatively stable market we have seen where house price rises, in the main, are in low single figures. On average, since 2005, even with the big rises over the last 18 months, most regions and countries registered around inflation growth of 3% each year when you iron out all the ups and downs.

Returning to small price rises each year would be great, it gives people an incentive to move, but doesn’t cause the crazy 18 months we’ve seen in the market since the pandemic hit. Also, the good news is that despite the high volumes for 2021, forecasters expect the long-term average of 1.2 million sales this year. Although I thought this was too high a forecast a few months ago, I think it’s about right now. The reason being is that when you add up the sales from 2020, 2021 and the forecasted sales for 2022, it does mean that over the three years, on average, we’d hit sales just above the long term 1.2 million average (1,233,000), so I’m happy we will see decent volumes again this year.

Will interest rates and cost of living rises hamper people’s moves? I don’t think so unless they rise much higher than the current forecast – up to 1% for interest rates and 4-5% for inflation.

What’s here to stay?

What will be interesting this year is to see whether some of the changes we saw during the pandemic actually stick. For example, we are already hearing stories of people moving back from the country to the cities, both to buy and rent. We should also have a better idea by the end of this year as to what will happen work wise, both for those in the industry and for buyers/sellers – how important will being near the office be? Will the majority move to a few days working in the office and the rest at home, or will most go back in five days a week once we are allowed to mingle freely again? In addition, will we go back to the typical mix of sales – or will the older, more wealthy property owners continue to drive the market? Will home offices remain a ‘must have’? And will access to green space continue to drive up prices or with the huge increase in utility bills mean an A to C EPC rating will take over as an influence for valuations?

So, for 2022, hopefully we can look forward to a calmer 2022 in the housing market and a better understanding of what the future of the buying and selling market will look like.

February 25, 2022

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