How is the housing market going to normalise in 2022?

  • To understand what were the 'abnormal' drivers of 2021.
  • To be able to explain better to clients what the housing market will look like in 2022.
  • To ascertain what sort of resources, staff and market analysis firms will need in 2022.
  • To understand what were the 'abnormal' drivers of 2021.
  • To be able to explain better to clients what the housing market will look like in 2022.
  • To ascertain what sort of resources, staff and market analysis firms will need in 2022.
pfs-logo
cisi-logo
CPD
Approx.30min
pfs-logo
cisi-logo
CPD
Approx.30min
twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
pfs-logo
cisi-logo
CPD
Approx.30min
How is the housing market going to normalise in 2022?
Photo by PhotoMIX Company from Pexels

There was an expectation that if people’s house purchase had not completed in time for the end of the stamp duty holiday then they may well pull out and we would see whole housing chains collapse as a result.

In reality that never happened, and people went ahead with their purchases. Arguably this is sensible with house prices rising at such a rate.

Anybody pulling out of a house purchase as they would no longer benefit from a stamp duty saving would be highly likely to pay even more on the purchase of the next home a couple of months later, as house prices continue to escalate.

It became apparent that even before the stamp duty holiday ended, market demand was no longer fuelled by these savings, but instead by a more powerful long-term driver. Decisions on property purchases are being based upon lifestyle choices.

A growing number of people are no longer working full time in the office, and there is a question mark over whether hybrid working will become the normal working pattern.

This has resulted in increased demand for homes with more space, such as an office or a garden. A lot of people have decided to move out of cities and relocate, with some going back to their home towns.

The significance of lifestyle choices became apparent after June 2021, when the biggest stamp duty saving finished.

People who had missed out on this went ahead with purchases regardless, because they were a looking at a bigger picture of a long-term future in their dream home and, with tapered relief until September, people still benefited from a saving – albeit a smaller one.

While they would have preferred not to pay that extra tax, they were prepared to do it because for them it was not just about cost saving, but about lifestyle.

Financial advisers will also have more time to focus on their back book

Looking at the past year overall, we have also not noted a significant increase in the number of failed transactions, which could have indicated a lack of confidence in the market.

Levels are at where they would have been prior to the outbreak of the pandemic. Typically reasons for transactions falling through have not been not related to Covid-19 but are the same reasons as usual.

These include people deciding that they do not want to go ahead with a purchase because they actually want to stay where they are, and do not want to sell their house after all.

With the shortage of housing stock there was also a noticeable increase in the numbers of people extending or improving their properties instead.

Strong remortgage market

PAGE 2 OF 4