The last two years have been unpredictable for the property market due to the effects of the ongoing pandemic. But beyond this uncertainty, the market is gearing up for a positive outlook in 2022.
House Price Predictions 2022
Brits took varying survival measures in the wake of COVID-19. Many moved to larger properties with more space to work from home, while others switched from large towns and cities to the suburbs. These shifts have had a significant impact on house prices causing prices to reach their highest point since 2007.
In 2022, Zoopla predicts that house prices in the UK will grow by 3% and this growth will likely affect at least 1.2 million house sales by the end of the year.
Rightmove also predicts a rise in house prices in 2022, however, they expect to see gains of around 5% - which will mean an increase of about £17,000 based on the current average asking price of £342,401.
This is because we’re still seeing a huge number of home-hunters looking to move, and not enough homes available to buy, so the imbalance continues to push prices up. Further, the change of the UK labour force to a hybrid working model will continue to directly impact housing patterns.
In terms of regions to watch, Savills survey on property market trends suggests that the North West and Yorkshire will likely see the highest house price increase. While London has been the hardest hit city by the pandemic, it is swinging back into positive territory with property prices expected to grow by 8% in 2022. The return to work in the capital as well as the rise in the number of overseas buyers will, in part, be responsible for this anticipated growth.
Rental Market Predictions 2022
The rise in property prices and the lack of house supply in the UK has had a direct impact on rental demand and rental yields.
And with interest rates so low, large investors will see the UK as a great opportunity for a return on investment in 2022, with many of them setting their sights on the Build to Rent sector and on Purpose Built Student Accommodation (PBSA).
According to Zoopla’s latest Rental Market Report, there is also more leeway for strong rental growth in areas of the country where rents are relatively more affordable. This suggests that rents could rise above earnings outside the south of England, supporting rental growth across the UK at 4.5% in 2022.
The Midlands and North West are expected to be the leading zones for development in England in 2022. According to Zoopla, rental yield growth in these regions will grow by 4% and 4.5% in the year 2022.
Areas such as East Midlands experienced a price rise of 8% in 2021 and this is currently the highest rental growth rate across the UK. However, more regions will also experience consistent growth into 2022 as the market starts to gradually cool.
Rental Market Hotspots for 2022
Birmingham is a top contender for property investment. The growth potential in the city is due to its mounting population and affordability and the region's suitability makes it an attractive investment hotbed.
Industry enthusiasts often love to invest in emerging locations. Within the East Midlands, Derby County is the leading city. The county's lucrative future is making it a preferred destination for property investment choices in the coming year.
Known as the economic powerhouse of the UK, Manchester is a perennial hotspot for property investors with a skyline evolving as rapidly as its rental growth.
This cosmopolitan city is one of the top 10 lucrative investment locations. The reasonable property prices make it a lucrative prospect for investment enthusiasts going forward.
Nottingham is also expected to witness a surge in property investment. The city's proximity to universities will propel the growth of property rates.
Driven by quite a few developments in this region, property prices are expected to surge in the following year. Additionally, it’s estimated that the student population in Leeds has now swelled to more than 70,000.
In the last ten years, Edinburgh has seen exceptional growth in property prices. The city's economic strategy aims to make the destination the most productive in the country which is expected to correlate with a gradual increase in rents into 2022.
Making your next move in 2022
Wherever you plan to set your sights in 2022, we can help you fund your next deal and ensure it is a success. If you are not sure about your strategy for the year ahead, speak to our funding experts today for a complimentary consultation.