2021 proved to be an exceptional year for the property market, with annual growth hitting 10.4% and prices are 15% above the level they were at just before the pandemic hit in March 2020. At the same time, thanks to the stamp duty holiday, the number of transactions came close to highs last seen in 2007 (source: Nationwide).

London had been lagging behind the rest of the country but after a slow start, showed signs of a sustained recovery, with prices up by 2.6% in 2021. In Prime Central London (PCL), which includes Marylebone, Mayfair, Hyde Park or Regent’s Park, there was the welcome return of international buyers and prices rose in each of the last 6 months. Many are now predicting that, as the heat comes out of demand for rural homes, PCL will become the driving force of the property market. Elsewhere, prices are expected to continue rising this year but at a more sustainable rate of between 3% and 5%.

Rightmove's index is currently showing December’s figures and the usual seasonal slowdown. Asking prices were down by 0.7% and prices are likely to continue softening during the course of the next couple of months. Over the holiday period, however, large numbers of people will have begun hunting for properties on the portals. In 2020, Rightmove reported there were over 51 million visits to their site between Boxing Day and our return to work. This time around, those numbers were up by 21% on Boxing Day alone. It means there is often a surge in buying activity as the market re-opens in January.

Fortunately, Omicron has turned out to be not nearly as disruptive as was first feared. Nor is there much sign of the base rate rise having any effect on the market. The reduction to 0.1% was only ever intended to be a temporary measure to help the economy get over the shock of the pandemic. Even if headline rates reach 2% this year, as expected, for anyone coming off a 5-year deal, it would represent a reduction rather than an increase, as the average rate five years ago was 2.34%. For those on a 3-year deal, there would be a very modest rise, with the average rate around 1.81% when their deals were taken out.

HOUSE PRICES AND STATISTICS

Nationwide: Dec 20 to Dec 21: National £254,822 +10.4%. London £507,230 +4.2%
Halifax: Dec 20 to Dec 21: National £276,091 +5.2%.
Land registry: Oct 20 to Oct 21: National £268,349 +10.2%. London £516,285 +6.2%
Hometrack: Nov 20 to Nov 21: Top 20 cities £276,800 +5.2%. London £497,800 +2.8%
Rightmove: Dec 20 to Dec 21: National £340,167 +6.3%. London £637,220 +2.6% (asking prices).
 

BUY-TO-LET

Average rents (excluding London) rose by 8.6% to £1,047 over the last twelve months, but it’s the towns and cities that have seen some of the fastest growth. Tenants have been returning to city centres in such numbers that rents in many of those areas have seen double-digit growth. In Edinburgh, for example, tenant demand was up by an eye-watering 49% compared to the same period in 2020 and by 36% in Manchester. In the capital, which saw some of the most challenging market conditions during the pandemic, rents were up across the board. In Greater London, between July and September, they rose by 3.6% and by 5.6% in inner London. HomeLet’s index is a month further ahead and, according to them, London's average rent was up by 9.7% compared to 2020.

Commenting on the latest data, Matthew Carter, HomeLet & Let Alliance Head of Marketing, said:

“In normal market conditions, we might see spikes in rental values for desirable or emerging areas, but we’re still seeing a really high demand for all property in the lettings market; that’s now the case in most parts of the UK. With fewer new properties coming up to rent when compared to pre-pandemic levels, we can expect the trends we see continuing throughout 2022.”

Such high levels of demand mean the average rental property is now being snapped up in as little as 17 days – the fastest ever recorded. That demand, though, has changed somewhat, with renters now tending to search for larger flats, preferably with room for an office. Rightmove is currently reporting competition for four-bedroom flats is up by 131% and by 124% for three-bedroom flats.

If you have a flat or a house in Marylebone, Mayfair, Hyde Park or Regent’s Park and you’d like to know what it’s worth in the current market, just give us a call at Manors and we can arrange a valuation.