Shift in priorities as we adapt to new ways of working and living.

Last year was one of the busiest for the housing market in more than a decade, driven by a reassessment by many homeowners of where they are living – prompted by the COVID-19 pandemic, a search for more living space, low mortgage rates, better access to mortgages for first-time buyers, and, of course, the stamp duty holiday.

There’s little doubt that the pandemic and lockdowns have influenced what buyers want in a home, with a strong broadband connection, flexible space and access to nature high on the wish list. Prospective homeowners have been looking for properties with purpose-built office space and a peaceful garden area to enhance the home working environment.

A garden or proximity to nature have, for many, become increasingly important. Moving this year, people will value outside space as a top priority with some happy to trade an extra bedroom for a larger garden or balcony.

But now we have entered 2022, what is in store for the housing market this year? Research shows that 22%[1] of people currently want to move, which significantly higher than the usual 5% in a normal market.

MORTGAGE RATES AND TAXES

The housing market this year will be influenced by both positive and negative factors.

On the positive side, the pandemic-induced search for space has further to run. The ability to work from home has expanded the horizons for many office workers who now feel able to look further afield.

But the rising cost of living, combined with an expectation that mortgage rates and taxes will rise this year, could impact affordability for some people.

REFLECTING ON HOME MOVE OPTIONS

House price growth is expected to end 2022 between 3% to 3.5%, with growth likely to be strongest in the East Midlands and North West and weakest in London.

The nationally representative survey of UK households found that 22% remain ‘eager’ or ‘very eager’ to move home in the next 18 months as a direct result of the pandemic. As offices confirm their new working practices, more households will be reflecting on their options to move home.

SUPPORT HOUSE PRICE GROWTH

The high levels of equity many homeowners have built up during the past few years and the shortage of homes on the market are expected to support house price growth.

Property transaction levels are expected to reduce by 20% to 1.2 million, in line with the long-running average but still comparatively high compared with the past decade.

The research expects the momentum in the property market to outweigh some emerging headwinds from higher living costs and potential higher mortgage rates.

FIRST-TIME BUYERS

Demand from prospective first-time buyers has been running at 30% above the five-year average since last summer, and looks set to remain heightened into 2022.

The market still remains fast-moving and if there is a slow down, this is not expected to start until well into the year. As a result, buyers will need to be prepared to move quickly

if they see somewhere they like. It makes sense to have a mortgage offer agreed in principle before starting the property viewing process.

With many prospective buyers looking for more space, particularly a garden, buyers may find they have more choice and less pressure if they opt for a flat. If you opt for a flat rather than a house, your initial purchase costs will be lower.

With a house, you have a higher potential for capital growth in the long run, but it is typically a larger investment with high initial costs to go with it, including many hidden extra costs associated with buying a house.

HOME-MOVERS

For anyone thinking of moving, it’s still good news as demand from prospective buyers is continuing to outstrip supply. Unfortunately, these same dynamics may make it challenging to find the next home. Buyers need to carry out as much research as they can before listing their current property and talk to local estate agents to find out how fast the market is moving in their area. If the market is moving very quickly, buyers should consider having an offer accepted on a property they are looking to buy before listing their current home for sale.

Maybe you’re just beginning to explore the idea of moving or perhaps you’ve outgrown an existing home and started house hunting already. Before you start searching for your next home, you’ll want to find out how much you might be able to borrow.

The base rate is expected to increase over the next year, which means interest rates will likely follow suit and become more expensive. Some interest rates have started to rise already. This means that you could save more money on your monthly payments if you secure your mortgage now, rather than wait until rates rise.

NEED HELP FINDING THE RIGHT MORTGAGE DEAL?

Wherever your next move takes you, we’ve got the right mortgage for your plans. To discuss your mortgage options, contact The Surrey Mortgage Broker – telephone 01252 759233 – email: info@thesurreymortgagebroker.co.uk

Source data:

[1] Zoopla UK House Price

Index, September 2021 index: www.advantage.zpg.co.uk/wp-content/uploads/2021/10/UK-House-Price-final-report-Sept-2021-1.pdf – published 26.10.2021