Strutt & Parker maintains UK house price forecast as buyer competition remains strong against ongoing lack of supply.
Strutt & Parker has maintained its UK house price forecast for 2022, despite new pressures presented by recent interest rate rises and inflation. The property consultancy’s latest forecast shows UK property prices remain on course to grow by up to 7% and up to 10% for Prime Central London (PCL) as demand from buyers remains strong in a housing market with ongoing supply constraints.
Guy Robinson, Head of Residential at Strutt & Parker, said: “Despite the current challenges in the market, the sector remains very robust and we are optimistic for 2022 as we expect to see a very competitive market this year. The impact of the challenges are likely to unfortunately impact aspiring first time buyers rather than current home owners. With demand continuing to outstrip supply, the extreme shortage of stock will sustain further house price growth.
“One of the main drivers of demand is the continued shift in individuals’ requirements of homes and locations. As a result, the regional housing market has seen strong price growth, driven by large demand and low stock availability in the regions. Commuter towns are retaining their popularity but with many employers still working to hybrid models, this is opening up more buying options beyond traditional high employment areas.”
Vanessa Hale, Head of Residential Research and Insights at Strutt & Parker: “The current economic outlook is optimistic for 2022. The rises in interest and inflation rates are unlikely to have an immediate impact on house prices as we have not seen a reversal in the behavioural shifts seen as a result of the pandemic. Therefore the shortage of stock and high demand will to have an impact on house price growth and our forecast reflects this.”
For Prime Central London, Strutt & Parker’s sales index data for Q4 2021 showed record quarter on quarter growth of 0.7% and year-on-year growth to 1.8%.
Louis Harding, Head of London at Strutt & Parker, said: “The 2022 sales market is showing signs of very strong demand, which will be maintained with the return of international buyers, however, stock levels are down year on year, particularly in the house market, which is resulting in elevated prices being achieved. Last year within London, activity cooled slightly as autumn arrived, following a high level of transactions in the prime central London market in the first half of last year. However, the super-prime market moved very well in 2021 with many stand out sales seen in some of the capital’s most exclusive postcodes.
“Lettings in PCL exceeded expectations but lack of stock is an issue and as a result we expect moderate growth for 2022.”
Across the UK, current sales stock volume is down 30% year on year and the average time spent on the market (excluding London) has decreased by 11% on 2021 and 24% on 2020, highlighting the competiveness of the market. The greatest differential in terms of applicants compared with stock is seen in Exeter and Norwich, two areas that have consistency experienced high levels of interest in the last two years.
Other competitive markets across the UK include Guildford, Inverness and Newbury, with last year’s applicant numbers up 68% on average compared with pre-pandemic levels.
Kate Eales, Head of Regional Agency at Strutt & Parker said: “Outside London, we expect buyers to adapt to this very competitive market. With buyers looking for value for money and considering the next town along to hotspots and researching lesser well-known areas that have plenty to offer. It’s not just space that buyers dream of, a good community will be a strong factor with local pubs, independent shops, transport links and schools continuing to drive popularity.
“We are also expecting more buyers to consider a move to the coast. Our latest Housing Futures survey revealed that coastal areas are a popular location for people looking to move in the next five years. The desire to live near the shoreline saw a dramatic increase – from only 4% stating it was their current area to 18% saying it was a future area they desired to live. When it comes to locations, I think we will see Suffolk and Norfolk coming into their own, along with Eastbourne and other quintessential seaside towns.”
The estate agency’s five year forecast estimates price growth in the UK with a best case of 30% and 20% downside risk. Prime Central London’s forecast remains at best case of 35% growth and 20% downside risk.
Source: Show House News
