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Change afoot in UK housing market but no need to panic

Change afoot in UK housing market but no need to panic
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The 'dark clouds' of uncertainty that hung over the housing market in 2020 will not reappear in 2022, despite the changes that the pandemic ushered in, commentators have predicted. 

James Forrester, managing director of Barrows and Forrester, said there might be some changes, such as a slight correction in the housebuyer trend towards larger properties and a slightly lower gear in terms of house price growth.

But he added: "The dark clouds of uncertainty that hung over the UK property market for much of 2019 and early 2020 have yet to return and there are no signs of them doing so in 2022 either.

"So we can expect more of the same where upward house price growth is concerned, although it’s likely that the market will shift down a gear or two."

Over the past few months, annual price house growth as an average for the UK hit double figures. According to the latest house price index from Nationwide, the average price of a property is now £252,687, with annual house price growth increasing slightly in November to 10 per cent.

According to Forrester, this has largely been driven by an imbalance between supply and demand, but also a push for bigger homes in the wake of lockdown restrictions. 

He added: "While there will never be enough stock to satisfy demand, this trend for larger homes is unlikely to be as intense going forward and so we can expect a slight correction in this sense.

"A 5 per cent uplift for the year is probably a little bit conservative and it’s fair to say that’s the minimum benchmark for market performance over the coming year.”

Similarly, director of Benham and Reeves Marc von Grundherr said while there was no "crystal ball" that could predict the fortunes of the property market, it was likely that 2022 would see further growth, despite a potential interest rate hike from the Bank of England, which could feed through to mortgage rate increases.

But he said as any increase would be marginal, it was unlikely to "deter demand", and this was and would remain the primary driver of price growth.

Even the latest Omicron variant threat would not "derail a London market that has finally awoken from a slumber of subdued property price growth."

He said the company expected the central London market to "climb by 4-5 per cent at the absolute least, while outer London will see further growth still."

Adam Kamani, chief executive and co-founder of the MoveStreets property portal, said if people expected 2022 to present a more muted picture, especially as the mortgage market was boosted over 2020 and 2021 by stamp duty holidays and government support and this has now ended, they would be mistaken.

Even with the end of stamp duty holidays, he said the "hopper of property transactions remains full to the brim".