Where is the UK Real Estate Market Headed in 2022?

The COVID-19 pandemic has affected us all in different ways; we know that the majority of businesses have suffered at some point but how has it affected your household? Perhaps you’ve managed to save money by working from home and cutting out the commute. Your credit card may have finally had a chance to recover from all of those trips to Starbucks. You may have used the money you were going to spend on a holiday abroad for a less pricey staycation – or maybe you’ve decided to invest it into your home.

How did COVID-19 affect house prices?

House prices in the UK went up exponentially – even areas which were typically more affordable experienced a remarkable rise in price. The stamp duty holiday was a huge motivator to sell up and make an investment. Property developers and investors were incentivised by the chance to save a substantial sum. There was a shortage of property for sale due to the uncertainty homeowners were feeling through the pandemic however three-quarters of buyers sold their homes and made a profit, selling them for more than what they originally bought them for. A huge number of buyers bought ‘fixer-uppers’, hoping to renovate and sell the house as soon as possible, (a process known as flipping). 19,000 properties were renovated and sold during the pandemic. House prices have certainly gone up but they’re forecasted to come back down through 2022. If you’re looking to buy, you can still expect a fairly reduced rate as the market adjusts. 

What about Mortgages?

Mortgage lenders benefited greatly from the pandemic and they fully expect the real estate market to cool down now. It’s looking like the UK will resume pre-pandemic patterns for mortgages, however, people are still on the lookout for more space – particularly those that are working from home and are in need of extra office space – children are still in the background of zoom meetings in some households! 

How Covid-19 has affected mortgages in 2021

Over 1.6 million homeowners decided to take a break from repayments because of the effects the pandemic had on their income – redundancies and uncertainty meant mortgage holidays boomed. Lenders were also skeptical and increased required deposits. Due to lockdowns and social distancing, physical valuations of homes were unable to be carried out, meaning mortgage approvals fell through.

Is it possible to get a good mortgage deal in 2022?

The rates were so low in 2021 that they are much more likely to rise; however the base rate move shouldn’t add very much to your monthly payments. If you’re coming to the end of your fixed rate, it’s always a good idea to consider remortgaging onto a lower rate of interest. You can estimate your payments to work out whether it’s a good idea to get a good mortgage deal.

Is it a good time to rent or buy?

Although renting may seem tempting (particularly through uncertain times) buying a house will usually save you money long term. Consider how long you hope to remain in your next home – If you’d like to stay in your house for an extended period of time, getting a mortgage and having your own property would be better suited for you. It’s satisfying to know that your monthly payments are going towards buying your home rather than paying ‘dead money’ – money going straight to your landlord. It’s also comforting to know that you can do whatever you please to the space you live in; if you wish to paint that wall blue, you sure can. When you’re renting there is always that worry that your landlord may decide to sell at any given time – meaning you may feel some discomfort with not knowing where you’ll end up next.

House prices increased by more than 11% in the year 2021 to January 2022 which may put you off buying if you’re a first time buyer, however these figures are predicted to slow back down to pre-pandemic house prices. Rental prices have also risen, so it may be best to bite the bullet and buy instead. You can easily calculate mortgage affordability based on your income which may shed some light on whether now is the right time for you to buy.

What will happen to house prices in 2022?

Now that the stamp duty holiday has expired, first time buyers may struggle to gain homeownership. Other homeowners may be less tempted to buy and may decide to renovate instead. Some have decided it’s time to move to the countryside now that they can work remotely. It’s likely that inflation will cool from 2021’s boom, but prices will stay more or less the same for now, particularly in competitive areas.