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Will 2022 Return us to More Stable Times?

property market 2022

There’s no doubt from anyone that the last two Covid-19 affected years have had a huge impact on the housing market.

The Stamp Duty holiday announced by Chancellor Rishi Sunak in July 2020 resulted in soaring prices and saw huge numbers of houses sold nationally, peaking last year in June at just shy of 200,000 – twice the number of a ‘normal’ year. What’s more there was only a slight dip, understandably after the holiday ended in September, with transactions then returning to pre-Covid levels by December 2021.

Now, as the spectre of Covid-19 appears to be abating perhaps 2022 heralds more stability in the housing market. There will, of course, be changes but a return to something like normal business this year will be very much welcomed. Nationally, the market believes that transactional numbers this year will rise as more attractive yields return, spurred by rising property values and rent increases.

That said, it’s not understating it to say that even though last year was an improvement on 2020, we’re still glad to see the back of it.

Overall we believe as we have stepped bravely into the new year, Liverpool is in a good place with the market doing well, and as we learn to live with Covid, while hoping it continues to beat a retreat, our view is that the city will continue to prosper and prove as resilient as it has been in recent times.

Wind in our Sales

The general outlook therefore is good for 2022 and we continue to be positive about sales meaning little change from last year. With a strong sales market continuing, we expect to see stock levels remaining low in the immediate future which will continue to support rising prices and good activity.

Very low stock levels means, of course, that demand is high and when we place a decent property on the market, we are inundated with prospective buyers. It’s certainly a sellers’ market. Borrowing rates are very low too and that supports demand and movement in the market. What we need is more stock and that’s what our sales team is working really hard to bring in.

As we move through 2022, stock levels should improve, principally because EWS1 and cladding issues affecting a lot of schemes will begin to be sorted out, especially after Michael Gove announced early in January the long-awaited withdrawal of the government’s Consolidated Advice Note, which has caused so much anxiety. Of all those schemes that are stuck in the city we predict that around 10 will emerge into the light bringing a much needed boost.

There are though, a couple of clouds that could potentially spoil the view. Interest rates are shooting up, although if a two-year fixed rate mortgage has gone up from 1.2 to 1.5, it’s still fairly cheap. Inflation is also soaring, there’s a cost of living crisis looming fuelled by energy price hikes and a National Insurance increase is planned in the spring. It will be a balancing challenge for agents, landlords and tenants alike.

Letting go or Holding on?

The city’s lettings market should continue to see rents rising and low void periods this year, although these may be a little at risk with the aforementioned rising inflation and cost of living prices, especially in relation to utility bills.

In terms of rent, there has already been a bounce back to pre-Covid levels in some cities, but we are likely to see a rise in rent prices primarily because of the supply gap, with some landlords choosing to sell their property in a very good sales market.

As we’ve discussed before, it’s a great time for landlords to sell up. Liverpool has a house price growth that has been outstripping every other UK city and in the last year seen a 10.6 per cent growth. So prices have recovered in the investment market alongside rents and with an absence of stock, demand is high.

We can’t see stock levels getting back to normal quickly, but at some point in the next 12-18 months they will begin to improve. We know this because we know what is being built and the completion dates and it’s making us feel positive.

In the meantime, we, like our competitors, do not have as much property to sell at this time of year as we usually do, but we still have a good pipeline to get through, keeping us busy. In truth, one of the reasons there isn’t much on our books is because we have sold so well.

In response we are growing our rental side, keeping void levels low and helping rents improve by encouraging landlords to review those that have been at the same level for the last four or five years. This is not about unthinkingly driving rents up, it’s more about matching the market and looking after our landlords.

The Landlord Licensing scheme that is to be introduced in April could also have a say in how the year plays out. We think it may encourage more people to sell up rather than pay an annual fee of up to £500 and subject themselves to the kind of intense scrutiny that they might feel they don’t warrant.

After a couple of years of uncertainty as well as seismic changes in the housing market we want stability. Covid-19 might yet have a sting in its tail and earthquakes are not out of the question in Westminster. We can only cross our fingers for a normal year and work very hard to make it happen.

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