Finding Balance

Families reassessing their priorities made moves to leave cities for rural and coastal towns in search of more space, which, in tangent with the stamp duty holiday lead to (that word again) unprecedented increases in purchases as buyers on the market far outstripped available stock. Lightning-fast sales and even the return of gazumping meant house buyers in 2020 and 2021 need to have nerves of steel and hold their course for as long as their budgets allowed.

But as the pandemic shifts into what is, truly, hopefully, the end game, will the property market follow suit in 2022 and find some kind of equilibrium?

Let’s investigate.

According to a survey from Zoopla at the end of 2021, around 22% of people currently want to move in the UK, which is significantly higher than the usual 5% in a normal market. And it’s not just Londoners seeking more space either. There are moves between cities, urban to rural, and, yes, movement from the country to the cities.

As Zoopla states in its report from the tail end of last year: ‘housing remains affordable in many markets and competition amongst lenders will remain intense, even if mortgage rates increase. Continued scarcity of homes for sale will remain well into 2022 in our view, supporting headline price inflation. In addition, our analysis shows that the impact of the pandemic on home-buying decisions has further to run. This will be supported by the scale of the financial gains homeowners have seen in the value of their homes since 2020 which will bring sellers into the market.’

It’s that last sentence that piqued our interest. Since the pandemic sent the property world into flux, it’s been the buyers with the best financial clout and ability to move quickly that have largely won out. But behind the scenes, other property owners with less of a burning desire to move have been quietly seeing the price of the properties increase. These upwards ticks were fast in 2020 and 2021, but are now beginning to slow down.

"We expect average house prices to increase by 3%,’ continued the report, ‘down from an annual growth rate of 6% at the end of 2021. The upward momentum in prices over 2020 and 2021 has been created by the initial impact of the pandemic and artificial stamp duty holiday deadlines over 2021 - factors that will not repeat themselves in 2022."

If these predictions play out, it could mean that as price increases slow down, homeowners may decide to sell up to capitalise while the going’s good. This would mean an increase in housing stock entering the market, which may, in turn, help buyers unlock a bit more flexibility as sellers find themselves with a bit more bargaining power.

Looking specifically at London, some agencies believe prime central and prime outer London (including Fulham and Parsons Green) may see renewed interest and growth as buyers with larger budgets look to pick up a bargain. Other areas of London may experience a more modest increase of just 2% next year, and only 5.6% over the next five years, according to the Evening Standard.

“The pandemic has accelerated the closing of the house price gap between London and the rest of the country. Even so, we still expect London to underperform the rest of the country until 2024, when the cycle is likely to end,” Aneisha Beveridge, head of research at Hamptons told City A.M. While we will see a degree of leveling up over the next few years, the gap between house prices in the capital and the other regions is likely to be wider than that seen at the end of the previous cycle in 2007.

One thing we can be certain of in the future is that those with the budgets to seek more space both inside and outside will be willing to pay a premium for it. Even if the finer details of those prices are still a little up in the air. And for better or worse, the genie is out of the bottle when it comes to working from home, with many ditching the office for good, alongside another large group who’ll have the option of flexible working.

So the demand for airy, family homes with long gardens and access to great schools and green spaces, like many of the homes you find in South West London, will remain. But the bargaining chips may just change hands between buyers and sellers a few more times yet.

To see the rest of our Q1/21 Magazine, click the link below to view the articles online: https://issuu.com/briklondon/docs/brik_magazine_-_2021_-_q4_-_issuu