2022 – More of the same but different

It’s hard to believe that we are approaching the end of the first quarter of 2022.

The UK’s housing market performed strongly last year, in part, as a result of the Government’s support which came in the shape of initiatives like the Stamp Duty holiday and the new 95% LTV mortgage guarantee scheme.  

On our own current evidence, it has been a strong start to 2022. Notwithstanding any previously anticipated re-mortgage volumes in the first quarter, sales and purchase activity is performing much better than expected – the strong performance of last year seemingly rolling over into 2022.  

This is despite inflation which is expected to continue its rise to about 8% later this year.

Though the market will be impacted by this, the consequent cost-of-living crisis, energy price hikes and the planned National Insurance increase in April, we should expect some balance in the shape of the many new lenders trying to come to market and the fierce competition for borrowers to keep rates in check.  

Purchase activity has been fuelled by various factors in the last few years. The drivers that occurred in the last year and a half haven’t really gone away. 

The key stimulus factors that have spurred such growth previously such as the Stamp Duty holiday and furlough scheme may no longer be supporting the market, yet house prices still continue to grow, albeit more slowly.

The race for space inspired by the pandemic is still spurring buyers to look further afield and hybrid working models have rekindled in interest in the commuter belts of our cities.

There have been reports of record numbers of new buyer registrations at estate agencies and the lack of suitable housing stock – both current and new – sustaining price growth.

The record interest reported by Rightmove over the Christmas period has not fully abated.   

Many employers are still yet to make decisions about whether to keep offices open, and who will be required in, where, and for what part of the working week. 

When this becomes more obvious, we are likely to have more homeowners deciding whether they are in the right or wrong property for their circumstances, which will mean further purchase transactions as those decisions work their way through.

Hybrid models support commuter living but we have seen throughout the pandemic that property prices in Wales and Scotland have performed well as many have relocated on a permanent basis. 

But owner occupier has not been the only success story of 2022 so far. One market that has continued to offer opportunities has been buy-to-let.

Short-term lets have flourished in recent times as staycations have become the norm for many holidaymakers and the lack of new-build over the past two years has meant that like owner occupier property, there is simply not enough rental property to meet the demand.  

What is clear is that over the remaining three quarters borrowers will face many complex issues requiring sophisticated advice. As a Society, we remain ready to help broker and their borrowers with all tenures! 

Michelle Ash is national account manager at Newcastle Intermediaries