The COVID-19 pandemic has hit the real estate market hard. Starting in 2020, you could watch prices both rise and fall. Now experts predict that the growth in property prices in the UK will decrease from 10% to 3-5%. Find out whether this is true and what factors affect the cost of housing.
Why have prices increased?
At the beginning of 2022, house prices hit an all-time high. However, compared to mid-2021, the value growth has slowed down. The pandemic has significantly affected the rise in prices, as it has brought disorder to people’s lives.
Due to the unclear situation and the many lockdowns in the country and worldwide, many people have changed their minds about buying houses or postponed this process until more favourable circumstances arise. At the same time, many construction projects had to be closed or halted their activities. This has led to a decrease in the number of available new buildings and has created a limited choice of properties in London.
Because of the lockdown, people in big cities began to think about moving to the countryside. The population density is lower in the villages, and people do not have to be caged up within four walls during quarantine. The country provides more opportunities for outdoor activities. Remote work has allowed many to leave their city homes and move to the countryside without losing jobs. Also, the government arranged a stamp duty holiday, which ended only in October 2021. All these factors influenced the price increase.
What is driving house prices in 2022?
Although the situation is stabilising and the stamp duty holiday is over, several reasons could lead to a rise in house prices in 2022. Firstly, the COVID-19 pandemic is not over yet, which means that the government may introduce additional restrictions on the real estate market.
Prices for utilities, including electricity, are rising. People who can’t afford to keep houses sell them. This means that the number of offers will increase. This factor may cause prices to fall in the future.
Mortgage interest rates have risen, so now, not everyone can afford a home with a mortgage, which may cause a decrease in the demand for housing. At the same time, due to inflation, the cost of services and goods is growing, which may affect the number of offers on the market.
Should I buy a house in 2022?
The truth is that no one can guarantee that residential property prices will fall in 2022 within a certain period. If you need housing, experts advise buying a house or flat if you require accommodation but be prepared for possible price fluctuations. Otherwise, for the market to stabilise, it is necessary to wait for the end of the pandemic, but it is impossible to predict its future.
Therefore, it is better to focus on finding your perfect home by examining the current offers on the market now.
What is the best time to buy a house?
Despite volatile prices, the 2022 market is generally different from a typical year. If you are planning to buy a house, then the best decision is to do it in spring, as the number of offers increases during this period, which means that you may find something at a bargain price. Traditionally, summer is not a very active period, as homebuilding companies and agencies tend to complete all transactions before the summer holidays and vacations.
The next wave of proposals for the sale of housing is possible in early autumn. Speaking about winter, on the one hand, you can see a lull here. However, on the other hand, the end of the year can also be an opportunity to save money and buy a house at a bargain price. The fact is that many companies strive to fulfil their initial plans and are ready to provide a discount. You just need to find the right house.
If you are not ready to buy a house, you can rent it. In 2021, statistics showed that the cost of rent per month is lower than monthly mortgage payments.
Is renting a house worth it?
The truth is that over the past years, many have preferred to rent a home rather than buy one. The reason was the rapid rise in housing prices due to the pandemic. So, for example, in 2021, the prices for a rented apartment were much lower than for purchase. The last time it happened was in 2014.
However, since that period, the rent prices have again gone up in many areas and cities. With the easing of quarantine restrictions, so many people began to return from the suburbs and the countryside to the cities. They need housing again, and increased demand has caused prices to rise. However, unlike when buying a new home, rental prices have stabilised. So if you do not want surprises in price spikes, perhaps renting an apartment is a great option.