As the craziness of 2021 draws to a close, now is the time for all residential property investors to take stock and decide how to proceed in the coming year.
House prices - still on the up?
Most forecasts out there from agents and property experts expect continued house price growth in the year ahead, but at a slower pace.
One of the most popular - and historically fairly accurate - house price forecasts comes from Savills. The property firm predicts 2022 to be an overall “less complex” year than 2021. It expects a house price rise of 3.5% over the course of the next 12 months, led by the north-west and Yorkshire and the Humber (both at 4.5%), with London trailing behind with a 2% increase.
On the other hand, Zoopla offers a slightly more downbeat prediction of a 3% rise overall across 2022. It also anticipates sales volumes of around 1.2 million, down from 2021’s 1.5 million but more in line with usual average transaction numbers pre-pandemic.
Mortgage outlook - is a rate rise coming?
The Bank of England base rate has remained at a historic low of 0.1% since March 2020 - longer than most experts envisaged. Lenders have been offering mortgage deals at similarly historically low levels, which has been great news for borrowers. For property investors who may otherwise have bought in cash, many have opted to make the most of the cheap borrowing available to help them further expand their portfolios.
Rates will inevitably rise, though, which is something property investors should certainly bear in mind when looking into borrowing to buy. Consulting with a mortgage expert or broker is always advisable to ensure you secure the best mortgage deal for your needs.
Rental market - demand still outstripping supply
The UK rental market has been expanding for many years, and demand is likely to remain high for the foreseeable future. Rental prices are expected to rise by around 3% in 2022, but there will of course be significant regional variations. Property investors should look at each area of interest in terms of past rental price rises, as well as local investment and regeneration in the pipeline that is likely to attract more tenants to certain locations. (Location Spy can help – check it out here).
Build-to-rent is a booming part of the private rented sector right now, and this is adding thousands of new homes for tenants. The space attracts a lot of institutional investment, but individual property investors are increasingly looking at build-to-rent developments as a lucrative investment option. The sector is therefore predicted to expand exponentially through 2022.
Housing and the environment
As the government continues its drive to achieve net zero carbon emissions by 2050, the housing sector is one of many that are becoming more environmentally aware. 2021 saw the introduction of a minimum EPC rating of E on all rental properties, and this is officially set to rise to C by 2025. However, some believe the government could look to increase the target to D in 2022, which is something for landlords to look out for.
As part of the government’s “green housing revolution”, additions like air source heat pumps, solar panels and triple glazing are all likely to become more commonplace in the property market. It was also recently announced that, from 2022, all new-build homes will need to have access to electric vehicle charging points. For property investors, 2022 could be a year to focus on making more environmentally conscious decisions in order to future-proof their investments.
So should you invest in 2022?
Predicting any solid outcomes from the year ahead is difficult, if not impossible, with issues such as Covid-19 and even Brexit continuing to have both a direct and indirect impact on the property market. Gathering as much data and evidence as possible is, as always, the best strategy any investor can employ to ensure a successful investment outcome.
This is where BellPepper can help. When it comes to managing your property portfolio, our reports can help. Get in touch to find out more.