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Will house prices continue to rise in 2022?

Posted 26th November 2021 by sdlt-admin

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“David Hannah, principal consultant at Cornerstone Tax, discusses the 2022 housing market outlook and whether a gap between the demand of rural and inner-city properties will widen.

With 2021 coming to a close, house price growth has continued to rise- showing an extraordinary 11.8% annual rise in 2021. The question is: Will it continue into 2022?

There is hope that the housing market will continue to rise throughout 2022, however, there are undoubtedly steps which need to be taken to achieve this. With a shortage of building materials occurring, due to the massive disruption caused to the global supply chain, it means that the housing market will ultimately be affected.

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With the increased demand of people preferring to purchase a property in rural areas – 10% of Brits have moved away from a city or urban area and 24% of Brits have seriously considered moving out of the city to a more rural area due to the pandemic in the past year. It has meant that supply is becoming increasingly short in rural areas with bidding wars emerging, caused by the rush to move to houses with more space. Mixed with the disruption caused to the global supply chain continuing it means there are major issues facing the housing market going into 2022.

The continued persistency of employees working from home means that there will be an increasing amount of inner-city vacant office space. This brings an opportunity for those vacant spaces to be developed into homes. However, a dilemma is whether there will be enough demand for this increased supply. With 44% of brits feeling that the impact of Coronavirus has made city living less appealing it would suggest not.”

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“Hannah said: “Rural properties in the sub 2 and a half million bracket are in very, very short supply. Indeed, houses in the £200,000- £750,000 bracket in or on the edge of villages in the countryside are all being sold. This has caused estate agents to complain about the lack of stock.

“The disruption to the global supply chain (caused by the pandemic and the closure of the Suez Canal) continues. There is still a shortage of building materials. This has caused delays in the commencement and, indeed, the completion of many residential housing projects. Most new developments (particularly those outside cities) are already selling off plan, even with completion dates as late as May 2022 they are already being sold.

“This shows a sign of that increased and, I think, persistent tendency to want a property with gardens near open spaces and countryside. Demand for inner-city apartments has started to increase. Interestingly that may not be a post-pandemic effect, but rather a geo-economic effect.

“The tendency to work from home or work from anywhere appears to be persistent. With the consequent effect on commercial infrastructure the question has got to be: What is going to happen to all that vacant office space? – Is it going to be converted into new homes using permitted development?

“Will this trend accelerate? It’s been very popular over the last few years as a way of regenerating urban centres, former warehousing, industrial, retail, hotels and offices and I think it will. This may on and of itself provide a further economic stimulus to this country.”

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