A forecast on the UK real estate market in 2022...

The holiday season is around the corner so that means looking back on an eventful year and preparing for the next. With the Covid pandemic still causing havoc in 2021, it sure has been a year of significant changes for the UK property market.

At Advantage Investment, we are hopeful for a prosperous 2022 with a housing market that offers lots of new opportunities.

A brief summary of 2021

With the pandemic still going strong and Brexit being finalised, we saw prices for housing rise like never before. Still, with a high demand for homes and lack of houses, residential property was ever so popular during the pandemic, attracting new capital to the sector.

At Advantage Investment, we expect these investments to remain strong in the long term with Build-to-Rent investments to reach new records. Especially with the news breaking in 2021 that renting was officially cheaper than buying in terms of monthly payments, the rental market has continued to grow from strength to strength.

This, combined with the increase of the price in materials, ensures that house prices throughout the UK will not crash as expected but maintain a steady climb, especially those in the major cities such as Birmingham and Manchester etc.

To make properties more affordable, the threshold for England and Northern Ireland’s Stamp Duty Land Tax was raised from its usual level of £125,000 to £500,000 in July 2020. This was reduced again to £250,000 from 1 July 2021. While before investors no longer showed interest in off-plan investments since construction was put on hold during lockdowns, the Stamp Duty changes positively influenced off-plan investments again. They also revived activity with the UK house price inflation reaching the highest growth rate in almost seven years. The cities with the strongest price growth were Liverpool, Manchester and Sheffield, all located in northern regions.

International investments in UK property took a big hit in 2021 and further concerns about a vaccine-resistant virus variant this winter put even more constraints on economic activity from abroad. Still, international investors have shown interest in residential property in secure and financially stable cities.

With a lot of other countries showing a struggling economy along with other cultural problems due to the pandemic the UK is quickly becoming the hotspot of the world for property investment.

Trends from the last few years have become even more apparent in 2021, especially with increasing numbers of people living alone and adult children living with their parents. Another trend we saw rising in 2021 is the growing demand for space and greenery following successive lockdowns. We have noticed new developments in the heart of the city that offer communal gardens or outside space have been extremely popular.

All in all, the property market has flourished in 2021 and more of the same can be expected in 2022. It has never been more apparent that investment, in general, is key to creating the life you see for yourself in the future and property is at the forefront of this vision, as it has been historically for many years.

Our short predictions for 2022:

We believe that price growth will continue to rise into 2022. House price growth is estimated to be highest in the North West of England and the East Midlands and weakest in London. As these regions show more capacity for growth, they will show stronger price growth. Birmingham for example has the fastest growing economy in the UK and with the HS2 train line and many main companies relocating to the city centre, prices as well as demand have increased dramatically and will continue to do so well into 2025.

Demand from buyers for UK property will continue to run strong into the next year and the shortage of homes remains a serious problem. Especially young professionals are likely to look for rentals, which highlights a great potential for rental investment returns. We believe rental prices will grow even stronger as the UK market continues to grow alongside increased demand.

The ability to work from home has induced a search for space amongst many office workers who now look for a more suburban lifestyle with more green and space to settle. This trend will continue to grow over the next few years with more and more people open to working flexible hours providing of course they have the space and facilities to do so.

To summarise, the majority of the UK is set to stay on this upward trend we have all gotten used to. House prices will continue to rise alongside the rental market and more and more homes will be built in all of the major cities just to keep up with demand. For an investor, it’s a really exciting time to delve into the UK market with opportunities all over.

Our property hotspot of the UK

If we had to select one city in the UK right now to invest in it would have to be Birmingham. The future is bright in Birmingham and the modernisation around the city should lift it to where it needs to be.

There are many other strong contenders that could have easily taken the top spot, including Liverpool, Manchester, Sheffield, Edinburgh and even Leeds however the strong demand in Birmingham combined with the HS2 links and major redevelopment already in place makes it all but certain for strong capital growth and high yielding investments.

Join our webinar!

We are running a webinar on January 13 to guide you through residential investments in 2022 and how to make the most of your budget. If you are looking to invest in 2022 and want to buy property in the UK, join our webinar to inform yourself on the UK housing market and get first-hand investment tips from our experts.

*Advantage Investment is a property investment company based in Liverpool