Property Market Monitor: January 2022

According to the Nationwide House Price Index, last year UK house prices grew at their fastest pace in seventeen years[i]. Three out of four quarters of 2021 saw average house price growth above 10% year-on-year (the last time this occurred was in 2004). The price of a typical UK home hit a record high of over £250,000, up nearly £24,000 over the year. Wales ended the year as the strongest region, with prices up by 15.8% year-on-year, followed by Northern Ireland where prices rose by 12.1%. In England, the Southwest was the strongest performing region, with annual price growth of 11.5%. The Outer Southeast, which includes cities such as Brighton, Southampton and Oxford, was also one of the strongest English regions in 2021. Looking forward, as discussed in our piece 4 property trends smart investors are watching for in 2022, we expect prices to continue to increase, but not at the speed witnessed throughout 2021. We also expect Levelling Up policies to continue closing the north-south housing divide.

Chart of the month: Monthly UK house price, annual % change

Source: Nationwide House Price Index, Blend Network

Market Commentary

  • According to the Nationwide House Price Index, annual house price growth increased to 10.4% in December, from 10.0% in November. In fact, every single month since May has seen year-on-year price growth of or close to 10%, something we hadn’t witnessed since 2004. The nearly £24,000 rise in the price of an average house we have witnessed this year is the largest increase we’ve seen in a single year in cash terms[ii]
  • 2021 will be remembered as a frantic property year, in terms of price but also in terms of transaction number. According to Rightmove, with two months of data yet to be reported, 2021 has seen the highest level of completed home sales since 2007. The platform reports that seven out of 10 properties advertised on their portal are marked as sold subject to contract, compared to just two out of ten back in 2012[iii]. According to HMRC, the number of seasonally adjusted UK residential transactions this financial year so far (April to November 2021) was up by 51% compared to the same period in 2020, 20% compared to 2019, 18% compared to 2018 and 15% compared to 2017[iv].
  • We continued to witness a wide regional divergence in house price growth (Figure 1), Wales ended the year as the top performing region for the first time since the data started to be collected in 1973, with house prices up 15.8% year-on-year (according to the Halifax House Price Index, Welsh average property price broke past £200,000 for the first time ever in December[v]). Northern Ireland (+12.1%) followed closely behind and saw the strongest end to the year since 2007. Annual house price growth in Scotland was 10.1%, in line with the wider UK outturn. At the lower end, London was once again the weakest performing UK region[vi].
  • Will the market cool in 2022? Most market participants seem to believe so. According to Nationwide[vii], “it appears likely that the housing market will slow next year.” They cite the end of the stamp duty holiday, the Omicron variant which could reinforce the slowdown if it leads to a weaker labour market, and higher interest rates. Rightmove also predict that the frantic pandemic property market will ease[viii] and return to ‘closer to normal’ this year. They expect the national asking price of a property will rise by 5% in 2022. Capital Economics also predict a 5% increase in average house prices this year.

Property Market News & Data

  • According to Savills’ latest Residential Property Forecasts, average house price will rise by 13.1% over the next five years[ix], with the north (Northwest, Northeast, Yorkshire & Humber) expected to outperform the south, particularly London and the Southeast.
  • The November RICS UK Residential Survey results for near-term price expectations signalled that prices are expected to continue to drift higher at the national level, as a net balance of +66% of contributors envisage prices rising over the next 12 months[x].
  • According to data from the Department for Business, Energy and Industrial Strategy’s Monthly Statistics of Building Materials and Components report, the price of building materials rose every month between September 2020 and September 2021[xi].

Figure 1: UK regional house price growth Q4 2021


Source: Nationwide House Price Index, Blend Network

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Past performance is not an indicator of future returns.

Data found in this article are the property of the sourced information. Whilst every effort has been made to ensure this data is correct, Blend Network cannot guarantee there are no errors in the sourced data.

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[i] Source: Nationwide House Price Index, available at https://bit.ly/3sWxC6Z

[ii] Source: Rightmove House Price Index, available at https://bit.ly/34mjfPe

[iii] Source: National Statistics, available at https://bit.ly/31rXJre

[iv] Source: Halifax House Price Index, available at https://bit.ly/31sdrTg

[v] Source: Nationwide House Price Index, available at https://bit.ly/3sWxC6Z

[vi] Source: Nationwide House Price Index, available at https://bit.ly/3sWxC6Z

[vii] Source: Rightmove House Price Index, available at https://bit.ly/34mjfPe

[viii] Source: Savills Residential Property Forecasts, winter 2021, available at https://bit.ly/3zqHA1y

[ix] Source: RICS UK Residential Survey, available at https://bit.ly/3JDvU0d

[x] Source: https://bit.ly/3eN7rY3

[xi] Source: Nationwide House Price Index, available at https://bit.ly/3sWxC6Z

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