With the pandemic rolling on in many guises, the Brexit transition hitting turbulence, and the run-up to COP26 influencing housing policy, 2021 has been full of hurdles for the industry.
However, the sector has overcome these and has also been “turbocharged” by the Stamp Duty holiday.
With this as the backdrop, it looks set to harness pent-up demand and grow more consistently next year.
To try and make sense of the property market in the year ahead, we’ve put together our predictions for 2022.
2022 property predictions
Rent and house prices will increase
In terms of rent, there has already been a bounce back to pre-COVID levels in cities.
But we’ll likely see a rise in rent prices primarily because of a supply gap, with some landlords choosing to sell their property in a very good sales market.
We predict that there will be a 3% rise in rent across the country and that could even reach up to 5-10% in some high-growth areas.
The landscape will be much the same for house prices, with buyer demand pushing prices to a record high.
Next year we expect to see a price growth of around 3% for house sales.
Areas for growth
The Northwest, Midlands, East Anglia, and Essex are likely to see higher than average growth for rent and house prices in 2022.
This is in areas where movers get more bang for their buck and where they can fulfil their desire to have more space following the lockdown-inspired surge to suburbs.
Likewise, investors purchasing in the Midlands and North are benefiting from preferable mortgage deals with better loan to value ratios, improving yield and monthly cash returns on investment.
It’s because of this (despite historically strong equity growth in the south), buy to let activity has been more prominent in the Northern towns in 2021 and we expect this to continue in 2022.
Despite businesses starting to return to offices, many employers are still working to hybrid models, and this opens more buying options outside of traditional high employment areas such as major cities and commuter towns.
Build to rent set to expand
We recently covered the explosive rise of build to rent – building more housing designed for long term renters.
At the moment, this is predominately for multifamily properties, such as apartments or flats, but we predict this will soon diversify into the single-family or individual house market.
This is set to expand next year with real estate heavy hitters, such as Lloyd’s and John Lewis & Partners, diversifying some of their portfolios from commercial property into build to rent residential property, sending a signal to landlords that there is strength in the sector.
But the market needs a far larger supply of units in the build cycle to keep up with demand and this is a strong time to invest in build to rent.
The pandemic has shown residential property as a strong, resilient asset class and buy to let continues to show excellent return, with strong HPI and RPI projections, so it’s an opportunity for individual investors to expand their portfolio.
At LRG we’ve been working with several hedge funds and institutional investors that are readily investing in build to rent for residential property and can help larger private developers get into this space.
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