Regardless of the uncertainty surrounding the new Omicron variant or whether the Bank of England will raise interest rates, the housing market remains strong. Rightmove and Nationwide predicted property prices would increase by 5% next year. With the treasury reporting that house price forecasts range from a rise of 5% to a fall of 1.4%, this seems likely for 2022.
If we look at the main winners in the property market, the north-south divide in house prices looks set to close over in the next five years. For prime London sellers, having missed out on the property growth seen elsewhere in 2021, activity will be returning - seeing an overdue recovery in demand and prices in central London. This time last year the largest growth markets were Guildford, Winchester, Bath, Harrogate, and the Cotswolds. This year they are Marylebone, Mayfair, and Notting Hill. Savills forecasts that homes in prime central London will grow 8% in 2022 and almost 24% over the next five years. Flats seem to be back in fashion with workers struggling with long commutes to the office from their homes in the country. Furthermore, cash and equity-rich buyers remain in short supply. This is especially true with mortgage rates beginning to creep up on the expectation that the Bank of England will increase its base rate. Flats seem to be back in fashion with workers struggling with long commutes to the office from their homes in the country.
The main losers of 2022 will be city rebounders that have jumped the gun during lockdown and bought rurally who are now likely to return to the city. Also, with inflation and interest rates set to rise, squeezed affordability is going to scupper many first-timers. To boot, the cost of living is rising too, so unless your wages are rising, then as far as getting onto the housing ladder is concerned, it will continue to be a challenge for many in 2022. There are also homeowners who find themselves unable to move because their salary has dropped during the pandemic, limiting the amount they can borrow. Lastly, MPs in many of these areas, including in Cornwall, Devon, North Norfolk and the Lake District, are calling on the government to introduce planning rules that would allow them to limit the number of second homes and holiday lets in areas where locals are priced out.