Despite a global pandemic and early warnings from the Bank of England of a steep fall in property prices, it appears the housing market not only defied the odds but is actually thriving. According to the Halifax House Price Index, the average UK house price at the beginning of this year hit a record six-month high of £276,759.
This article will look into the extent of the rising supply and demand imbalance in the UK property market and what that means for renters and buyers.
Housing Supply and Demand 2022
The imbalance between housing supply and demand has helped to drive up house prices considerably and, as demand continues to outstrip supply, the growth in house prices looks set to continue.
Signs of normality are returning to pre-pandemic levels with many first-time buyers looking to climb the property ladder. Also, a pandemic-related desire for a more rural lifestyle has led many buyers to re-evaluate their lifestyles and choose properties with larger gardens and more space for working remotely from home.
Thanks also to artificially low mortgage rates and the holiday on stamp duty, which ended last year, many more homes have become affordable for buyers. With tighter inventory due to a scarcity in the supply of properties on the market, the huge demand from buyers could keep prices high for some time.
Is There a Demand for Rental Properties?
The surge in demand is also being mirrored in the rental market with large tenant demand, however, with a scarcity of rental properties on the market rents are also being pushed upwards. The greatest rises are being seen in the London rental market with rents higher than they were before the beginning of the pandemic. This demand is fuelled largely by employees gradually returning to the workplace coupled with larger numbers of overseas students looking for private accommodation.
The mismatch between low rental inventory and high demand from tenants has led to increased competition between tenants who wish to secure a rental property and also favours landlords as they can afford to raise rents. According to Rightmove, tenant demand for properties is 32% higher than it was this time last year, while the number of available properties is down by 51% as compared to the same period.
Many tenants left London and other large cities during the pandemic after reconsidering their priorities and lifestyle longing for a quieter and more spacious life in the countryside or in the suburbs. This has also caused rental hotspots to arise in coastal towns such as Chatham, Ramsgate and Folkestone and areas such as Berkshire and Ascot where rents have also risen.
Predictions for 2022
The uncertainty of pandemic-related variants and restrictions coupled with the rise in inflation and energy costs could very well temper the rise in prices recently seen in the housing market. Rises in interest rates will also make mortgages more expensive contributing to the decline in demand.
If you would like more information on any of the points discussed in this article please contact us here. Pinpoint Homes offers professional property services across the Enfield area and beyond, so get in touch to discuss your requirements and learn more about what we can do for you.