What’s the outlook for the sales & lettings market for 2022?

Mark ShiptonProperty market news

There are positive signs of continued strong demand for rental property moving into 2022. Despite the pandemic, the employment market remains robust and the number of job vacancies is at a record high. It is possible that rental demand may ease in the coming months, as Q3 tends to be the busiest time in the highly seasonal rental market. However, we expect demand levels to remain higher than usual, especially in town centres where there is an element of pent-up demand being released. On the supply side, there continues to be a shortage of good rental stock, due in some part to lower levels of investment into the sector by landlords, and this will underpin rental pricing.  We anticipate a strong finish to the year this year taking rental growth to around 4% – boosted by the opening up of global travel for London’s international rental markets. In 2022, we forecast that this level of rental growth will broadly be sustained, at 3.5%.

The sales market in 2021 was incredibly busy with more homes selling than in any year since 2007 with around 1.5 million completions. Of course, the high demand pushed prices up and the average price of a home in the UK is now around £260,000. This all meant house prices jumped by more than 10% over the year, one of the biggest rises on record. 

Opinions are mixed on what we can expect in 2022. There won’t be a repeat of the Stamp Duty holiday which fuelled the market in 2021 and a slight increase in interest rates seems inevitable, but that said demand is still strong and the signs are this will continue in the new year. Many expect the 2021 trend of sales to continue for some time to come.

Remote working has become a powerful motivation to move out of city centres, allowing people to seek larger properties and outdoor space in different, more affordable locations. The Office for Budget Responsibility, which advises the government, recently reported it expects a 3.2% rise in prices in 2022, having been more pessimistic earlier in the year. The central London market, badly affected during the pandemic period, is showing signs of bouncing back and confidence is high for price rises next year. All in all, there is a lot to be positive about for sellers in the year ahead.