Market Comment | Spring 2022

After the intensity of the property market over the last two years, fuelled by factors like the pandemic, desire for more space, and Stamp Duty holiday, some interesting trends are emerging in the world of property. In January, Zoopla reported that during the pandemic 41% of British homeowners changed their homes, sacrificing around 8.8m bedrooms in the process. Over five million people transformed a bedroom or spare room to make a home office, and nearly a million people built themselves home gyms. On average, UK households spent £3,714 adapting their homes during the pandemic - that’s approximately £36.5 billion in total.

"UK households spent £3,714 adapting their homes during the pandemic - that's approximately £36.5 billion in total."

Whether it was the luxury of a home gym or needing to compromise space at home for work, or other pressures, this has led to a reassessment of home setups. This prompted the headlines about the ‘Great London Exodus’, as families prioritise bigger homes and outdoor spaces away from cities across the country. This led to spikes in house prices in popular commuter areas and coastal towns. However, this exodus was greatly exaggerated, and there are plenty of reports of families coming back to the city as lockdowns eased again.

These changes are apparent across the market too - not just with large family homes. Zoopla found that more than eight in ten (83%) homeowners under 25 say they are currently having to compromise with their living spaces. All of this has led to a big start to 2022 in the world of property.

Demand for property in the UK jumped by 49% in January - the biggest New Year bounce for five years. Record demand was recorded for all property types, as buyers searched for both houses and flats, according to Zoopla’s latest House Price Index. This increase was similar to the record levels seen during the stamp duty holiday, proving the search for space is still on, but is now more competitive than ever.

Right Move reported earlier in the year that February was even stronger than January. New seller asking prices hit a new record high of £348,804 this month across the UK, rising by 2.3% (+£7,785). This is the biggest monthly jump in cash terms recorded by Rightmove in more than twenty years of reporting, and the annual rate of asking price growth (+9.5%) is the highest recorded since September 2014.

"New seller asking prices hit a new record high of £348,804 this month across the UK, rising by 2.3% (+£7,785)."

In London, flats and smaller properties are very much back in demand, as cautious first-time buyers start to actively scour the market after pausing their searches during lockdown and subsequent restrictions. The Evening Standard reported that “flat prices are outpacing the overall property market in five London boroughs - Barking and Dagenham, Greenwich, Newham, Hackney and Tower Hamlets - in a striking reversal of the trend of the last two years. In eight other boroughs - Wandsworth, Lambeth, Southwark, Waltham Forest, Lewisham, Islington, Hammersmith and Fulham, and Westminster - flat price rises have almost caught up with the overall market.”

As COVID restrictions ended in England, and businesses started asking staff back to the office on a full and part-time basis, London recorded the biggest jump in inquiries of any region (+24%) - a new price record, and its highest annual rate of price growth since 2016.

“High demand and a shortage of available stock are supporting a rise in prices and a new record average asking price this month,” says Tim Bannister, Rightmove’s Director of Property Data, in a report earlier this year. “The rising cost of living is undoubtedly affecting many people’s finances, especially those trying to save up enough for a deposit to get on the ladder or to trade up. However, despite rising costs and rising interest rates, the data right now shows demand rising across the whole of Great Britain, with many people determined to move as we head into the spring home-moving season.”

But the market itself is still very low in stock, which is leading to some seriously competitive pricing. The Telegraph reported in January that the average asking price of property rose by 2.3pc between January and February, equivalent to more than £7,700. This is the biggest monthly jump in cash terms ever recorded by property website Rightmove.

"The average asking price of property rose by 2.3% between January and February, equivalent to more than £7,700."

But there is some light at the end of the tunnel. According to Zoopla, there are still discrepancies between supply and demand, but the early signs of a better-balanced market, first reported at the end of 2021, are now starting to come to fruition. Tim Bannister says, “it seems that the fast-moving market has really hit home for sellers this month, with a number of those who are also buyers putting themselves in the best position to secure their dream home by becoming a ‘power buyer’ and getting their own home on the market first. This, in turn, is driving a rise in new listings compared to last year, giving the existing pool of buyers some fresh choice.”

To read the rest of our Q2/22 Magazine, click on the link below: https://issuu.com/briklondon/docs/brik_magazine_-_2022_-_q2