As an exceptionally busy 2021 draws to a close, property portal Rightmove says it expects a closer to normal, though still busy, market in 2022.
The good news for conveyancers is that the current record shortfall of stock coming to market may be about to turn. Current availablity hit another record low in November but the report shows that requests from home-owners to estate agents to have their home valued are 19% up on this time a year ago, indicating that much-needed buyer choice will be coming to market in the new year.
The latest Rightmove House Price Index indicates that the continuation of the seasonal fall in the price of property coming to market, down by 0.7% on the month, compared to a 0.6% fall this time a year ago, is a prominent sign that the market will return to traditional norms.
Although the report forecasts prices to rise by another 5% in 2022, it says that some of the edge will be taken off sellers’ pricing power by increasingly stretched buyer affordability, and more buyer choice boosted by previously hesitant sellers now gearing up for a New Year move.
Tim Bannister, Rightmove’s Director of Property Data, comments:
“The kind of frenzied market we’ve seen in the last 18 months happens only a few times in most home-owners’ buying and selling lifetimes, exacerbated by the even rarer event of a global pandemic pushing homes higher up most people’s priorities. While the pandemic is still having an ever-changing impact on society as we head into the new year, we expect a housing market moving closer to normal during the course of 2022.”
“A return to a less frenetic market due to more choice, and forecast slightly higher interest rates, will suit many movers who have held back during the last 18 hectic months. With a jump in the number of owners requesting valuations from agents with a view to marketing their homes, it looks like many of this group are now gearing up to make it a new year resolution to move, so more buyer choice could now be on the cards.”
“A rise in interest rates is likely next year, and whilst a rise is often regarded as unhelpful to the market, a slowing of the fast pace of sales, and associated pace of price rises, will help the return to more normality that will suit many movers. Buyer demand and market momentum remain strong going into 2022, with November showing buyer numbers 41% up on the election-subdued 2019, and still 3% up on booming 2020.”
The latest RICS UK Residential Market Survey also reported another month of declining new listings, but a 13% uplift in new buyer enquiries, an increase on October’s 11%.
Respondents frequently said the continuing drought in new listings was a significant factor holding back the market nationwide, with -18% respondents noting a deterioration for an eighth consecutive month. Additionally, the volume of home appraisals undertaken in November was below that seen in the same month last year, with the latest net balance coming in at -20%.
A lack of stock is therefore driving competition between prospective buyers, which is resulting in house prices being pushed higher, 71% of participants cited an increase prices, identical to October’s survey.
Looking ahead, RICS expects that prices will continue to increase, as 66% of contributors envisage prices rising over the next year.
Simon Rubinsohn, RICS Chief Economist, said:
“The issue of supply is gathering ever more importance in the feedback to the RICS Residential Market survey. Critically, the theme runs strongly both through the latest set of contributor comments as well as the data around new instructions and the decline in inventory on agents books.
“Unless this trend is reversed soon, transaction levels may flatline in 2022 with limited choice proving more significant than any shift in the interest rate environment for new buyers.
“The imbalance compared to the demand trend is, meanwhile, likely to continue to be a key factor supporting prices and indeed, even if the cost of mortgage finance does begin to edge up, it is likely that house prices will continue to move higher through the coming year, albeit at a somewhat slower pace than over the past twelve months.”
