Twenty twenty-one was an unusual year, to say the least.
International travel restrictions, local lockdowns, the return to the office—we all had to re-think the way we live and work. To adjust and adapt, many of us reconfigured our lives, making very important choices about our affairs.
Where to live is always a significant factor in anyone’s calculations, and the pandemic had a major impact on people’s financial—and lifestyle—decisions.
In the UK, the exodus to the country has been well documented as has people’s desire for larger properties with outdoor space/access. As a consequence, in 2021 the UK property market had a record year in terms of sales volumes and prices.
Nationwide’s annual survey revealed overall average price increase across the UK of 10.4 %. At the high end, sales of properties over £5 million were up 59% for the year and prices increased by 9.7%.
For those settling on/in London, according to figures from LonRes:
- Average prices increased 7.2% in Prime London.
- Buyers spent £11.6 billion on property here in 2021, which is 37% higher than the 2015-2019 five-year average.
- On average, houses outperformed flats at 12.6% year-on-year growth. New price thresholds were achieved in Notting Hill, St Johns Wood and Hampstead, where families can find more green spaces and larger properties.
However, not everyone fled the city; in fact many now want to come back. The shift to working from home has not been as permanent as some had anticipated, because many companies insist on their staff being at their offices regularly.
Also, now that theatres, galleries and clubs have re-opened (and even ‘parties’ are allowed), many realised why they liked living in London and will admit that occasional scenic walks may not be enough to justify country living.
Not a classic “buyers’ market”
International buyers are back in the market, but the trickle has not yet turned to a flood. Many delayed their visit but still hope to get here soon.
Going into 2022, the main feature of the property market is lack of stock, particularly of family houses and flats with outside space. At the end of December there were 17% fewer properties on the market than at the same point a year earlier.
For anyone wanting to rent instead of buy, the market conditions are not the easiest. While it was possible to secure advantageous terms during the dip last year, now prices in London are 23% higher and have, on average, returned to pre-pandemic levels. Choices, however, are very limited: LonRes had 2,000 rental listings this January vs. 10,000 in January 2021.
The picture is clear, but nothing is permanent
We expect the current conditions to continue in 2022.
Prices in Prime Central London are forecast to increase by between 13 and 24% over 5 years. Even though we always treat these predictions from the major high-street selling agents with caution, the overall market conditions lead us to believe this trend makes sense. Not everything will increase in price; but the best of the best will continue to outperform the general market. Doing your homework and seeking professional advice will place you among the winners in this complex and diverse market.
But, as ever, it’s not always an easy game. While demand still significantly outpaces supply, owners of the most desirable properties don’t need to advertise them widely or promote them on public platforms. Thus, most of the best properties—both houses and flats—still tend to trade off-market.
High-street agents have not been immune to disruption. It’s still a fragmented market, with many various local neighbourhood specialists. Meanwhile, numerous senior agents have exited the bigger firms in recent years to strike out on their own or join independent practices, meaning finding your dream home in the window of a high street agent is less likely than ever.
Ways to get ahead in 2022
In conclusion, here are a few tips that should give buyers more confidence in the coming months:
- Value can be found in central London, particularly among flats.
- Speed wins. Buyers who have a clear plan and financing in order have an advantage.
- If you want to rent, it’s imperative to find out about those properties before they hit the open market.
- For the medium term, thinking of property as an investment now may be a good idea.
If you’re looking to buy in the UK in central London in 2022 it would be advisable to start the process sooner rather than later while there are still opportunities available.
And, as ever, to confidently navigate the dynamic market of UK property it always helps to have a seasoned professional as an advisor and advocate.
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