House prices: ‘Number of factors’ continue to influence rising prices – 2022 predictions
Martin Roberts discusses the rise in house prices
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Guy Gittins, CEO of Chestertons, said that there are a “number of factors” that should continue to push property prices up in 2022. The expert explained: “The economy is recovering better than expected, employment and wages are booming and first time buyers will continue to benefit from the Government’s Help To Buy scheme until April 2023.
“Most importantly, the number of people looking to move heavily outweighs the number of properties available on the market.
“However, price increases are likely to be tempered by the rising cost of living and the expected increases in taxes and interest rates.
“The re-introduction of Covid-related restrictions also remains a possibility.
“Assuming national lockdowns are behind us we think average UK prices will grow by four percent in 2022, settling at two to three percent per annum over the following four years.”
In terms of London, property prices grew much less than the rest of the UK in 2021.
According to Chestertons, some of London’s higher value locations are still lower than their pre-lockdown level.
Guy added: “This, combined with a general shortage of housing and the fact that more people are returning to work in London, will push property prices in London’s higher value locations up by five percent in 2022, assuming no further prolonged travel restrictions.
“Prime central London prices will even see stronger growth of seven percent next year as international buyers return in greater numbers, tempered somewhat by the additional two percent Stamp Duty surcharge that non-UK residents are now charged.
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“Prices across Greater London are likely to be flat in 2022 due to affordability issues.”
According to the experts, rents are also expected to rise in the capital next year.
Richard Davies, Head of Lettings at Chestertons, explained: “With tenants continuing to return to London in greater numbers and a continued shortage of rental properties, we expect rents will continue to rise in 2022, albeit at a slower pace.
“We forecast that rents across the higher value London locations will grow by eight percent in 2022, and rents in prime central London by 10 percent.”
Chestertons predicts that rental growth across Greater London will be lower at around five percent.
Richard continued: “This is good news for landlords who are starting to see yields creep up above four percent in some areas, a fact that may encourage a return of buy-to-let investment, which has been largely absent since the introduction of the three percent stamp duty surcharge for second homes in 2016.”
One expert warned that Britons should “avoid” investing in property until the market is “more predictable”.
Mark Hughes, a Specialist Mortgage Advisor focusing on residential property at Pure Property Finance, explained: “I think it’s best that people avoid investing in property right now, especially if it’s a property that they don’t see as their forever home and they’ll want to sell in a few years.
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“We’re currently in, what I think, is a property price bubble.
“There has been a huge increase in house demand fuelled by a number of factors.”
The expert explained that this includes people being able to save more towards their house deposit as well as others wanting to move closer to family.
Other homeowners have wanted to move and gain more space, including an office space.
Mark added that Britons should focus on improving their current property.
He said: “Until the property market settles down, the best thing to do would be to make smaller renovations on a current property.
“If there’s any way that you can add in office space to your spare bedroom, then do that, or if you’re sick of the sight of your living room from spending too much time there, then perhaps upgrade it with some new furniture.
“This may also add value if you do still decide to sell your property in a couple of months.”
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