With property prices the highest they have been in 15 years, we look at the current housing market trends and determine whether investing in property is the best choice for 2022.
As we move into another stage of the pandemic, with possible restrictions and lockdowns looming, it’s not surprising that property prices are at the forefront of the conversation. With the COVID-19 virus causing unprecedented disruption to the economy and the way people socialise and work, office space, shops, and ultimately property prices have been severely affected.
Adding to the feeling of uncertainty, the expected dramatic rise in interest rates by the Bank of England, in an attempt to get inflation under control, is causing mortgage rates to rise, making homeownership an impossible dream for many.
Changed planning regulations, allowing property developers to convert former offices and commercial properties into residential properties, have allowed a flood of more affordable, accessible homes onto the market. Rental and property prices are not expected to go down any time soon due to a shortage of supply, resulting in cheap accommodation selling and renting at record speed.
Initially, the pandemic and the end of the stamp duty holiday were expected to be catastrophic for house prices, but they have been anything but. In fact, after an initial dip, prices in nearly all regions of the UK have been rising.
An agent from a well-known high-street agency commented, “We really need more stock. Warehouses, former industrial parks, and if offices are empty, convert them,” she says. International markets have reopened, and international investors are coming back. Post-Brexit, they are looking to invest”.
Wybo Wijnbergen, chief executive of Infinite Space, a Dutch-based, pan-European commercial agency specialising in flexible working spaces, commented: “To say the commercial real estate sector has come under strain during the pandemic would be an understatement.
“First and foremost, the spread of the COVID-19 virus has forced offices, retail outlets, and hospitality venues to close for long periods in 2020, with many companies terminating their contracts with landlords.”
He stated that there had been only £8.9 billion in sales of commercial properties in 2020, down a significant 30% from the previous year.
CBI Economics released a report in July of this year showing that 93% of businesses were keen to adopt a hybrid type of working environment, with most employees working from home either full-time or part-time, and only a mere 5% expected to be in the office full-time.
“Landlords now face the task of adapting their offerings and reallocating their office space in accordance with evolving demands,” added Mr Wijnbergen. “There is a new phrase in play here as landlords struggle to their offices.”