Property News – February 2022

The Rental Market

So, If you remember the news we put out last year, we predicted that city centre apartments would bounce back and this is exactly what we are currently witnessing.

In this BBC article snippet below, you can see that rental demand for city centres has boomed this month. People are returning to their offices and want to be back amongst the action that the city life offers them.

House Prices

The average property price grew by 1% in January and a total of 11.2% in the last 12 months, meaning that the average property increased by over £500 a day.

This has been driven by low mortgage rates and a huge increase in demand in relation to supply levels. We saw 2021 have its strongest year since 2007, this is 25% higher than pre pandemic levels.

Our View

We expect prices to continue to rise over the next 12 months with a solid 3.5% + in house price growth. However, if you head to the north, we feel this can be over 6%.

The reason we feel that it will taper down slightly from last year is due to inflation and an increase in the interest rates. We have already seen them rise to 0.5%.

Interest Rates Rise

So the Bank of England has increased the base rate from 0.25% to 0.5% to help try and curb inflation, we also expect more increases in the near future. Many of our clients are currently asking us how is this going to effect the property market.

Our View

So far we have seen BTL mortgage rates absorb the interest rate rise as many lenders have factored this into the current mortgage rates. However, we do anticipate that rates will start to rise slowly as we expect the base rate to rise in the near future.

In regards to what this means for the housing market.

It is going to decrease affordability slightly which will put more downward pressure on the prices. That being said, we feel for it to have a big enough impact and put a halt to the housing boom we are seeing right now, we would have to see rates close to the 4% mark. This is something we don’t feel is going to be likely anytime soon.

Overall, the increase of bank rates will not have a huge impact on property prices in the near future. Right now, it is a great time to invest within the UK market.

UK Economic Recovery

During 2020 the UK economy plunged 9.4% due to COVID and multiple lockdowns.

However, hot off the press today, we have seen that in 2021 the economy bounced back with 7.5% growth. This is its strongest annual expansion since the Second World War.

Another piece of evidence showing that the UK is a stable place to invest.


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