Outlook for the residential sector in 2022
As the New Year gets underway, our residential team at Fenn Wright are laser-focused on market sentiment in terms of sales activity, but particularly new stock being brought to the market, as it is very often an early indicator for the year ahead. Demand remained strong in the residential sector in the last quarter of 2021, but the supply of properties coming to the market was stubbornly low.
So how will that set the tone for 2022? What will happen to prices, and will we see a decline in transaction numbers?
Alan Williams, Head of Residential, answers these questions. “The resilience of the housing market in the East of England has been remarkable and many have become accustomed to simply ignoring any downbeat market predictions and in doing so, have benefited financially. In May 2020, the Bank of England warned of a potential 16% fall in property prices due to the pandemic, however, release of pent-up demand fuelled by the Stamp Duty deadline and post-Brexit release, saw huge volumes of transactional activity.
Sales activity across our network of branches in Essex and Suffolk remained strong until the traditionally quieter festive period. With demand high and the supply of new stock to the market falling by around a third, we see no signs of imminent house price deflation.
We are in constant dialogue with our large database of applicants looking to purchase in Essex and Suffolk and there are some who are waiting to see if house prices will dip. However, even without the support of the furlough scheme or the Stamp Duty holiday, there aren’t really any signs that’s going to happen at this stage.
We would advise those who can afford to buy a home now (and intend keeping it for several years) to take the plunge when the right property appears on the market. Zoopla believe that two fifths of households are considering moving in the next two years, which suggests that the supply of available stock should return to ‘normal’ levels and which might satisfy demand. Meanwhile Rightmove predict that prices will increase by around 5% in 2022. This is against a backdrop where inflation in the economy as a whole is at similar levels.
With the usual caveats around the pandemic, we think 2022 will be a positive year for homeowners and those wishing to move. We should see a return to a more ‘traditional’ year, influenced by long established seasonal trends and a better balance of supply and demand.”
So, what are the seasonal trends?
“Traditionally, spring is a good time to buy a house, because there are more homes on the market. March in particular is generally a good time to get out and about viewing, when the days start to get longer and the weather starts to get warmer. People are often keen to complete before the summer holiday period, which usually sees lower transaction levels in August.
New listings coming to the market tend to spike again during September and October, before dropping off as Christmas approaches. A more recent phenomenon is the Boxing Day surge in activity, as potential purchasers peruse the portals to see what is on the market as they consider a new year move. For that reason, we make sure we have our clients’ properties beautifully presented and ready for this surge of cyber activity.”