Q2 UK Market Report 2022

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Thinking of investing in property in 2022? Read our Q2 UK Market Report to learn more about the current trends and the outlook for the coming months.

The UK property market is in a period of transition, whilst the demand for property to buy or rent remains sky-high, there is an air of caution creeping in against the backdrop of economic uncertainty and the cost-of-living crisis.

Given these factors, is now a good time to invest in buy-to-let property in the UK? 

UK House prices here to stay?

Property price growth across the UK is currently at a buoyant 10.5% according to the latest data from Halifax. The acute imbalance between property for sale and the number of buyers seeking homes remains, confirmed by Zoopla’s latest data that highlighted purchase demand being 58% higher than the 5-year average whilst the supply of homes for sale to the market is 40% below the 5-year average.

However, where the UK’s property market previously seemed to be entirely unaffected by wider economic and political influences throughout the pandemic, it is now expected to resume more ‘normal’ levels of activity. Industry experts expect the market to cool slightly in the coming months and many predict price growth will likely slow but that doesn’t mean property values are dropping. Attention-seeking headlines talking of a potential market crash are inaccurate. Whilst the UK’s property market finds a sustainable pace in the current climate following a period of frantic activity over the past few years there will undoubtedly be a slower rate of price growth. For investors, a relative amount of predictability is a positive thing, more steady and consistent increases in prices will be welcome for those planning ahead.

As always, savvy investors will look to secure property for below-market value in areas set to see above-average growth – in 2022 it is absolutely still possible to find these opportunities in the UK if you know what to buy and where.  

City street

A supply-starved rental market 

Rental prices in the UK are rising at the fastest rate ever recorded, up 11% year-on-year. Experts similarly expect this current rate of price increases to slow as the cost-of-living crisis continues to hit household incomes over the coming months. This will not result in falling rental values but instead a steadier rate of growth, with tenants choosing to stay longer. Zoopla recently reported that UK tenants are now staying on average an additional 5 months compared with five years ago. The average tenancy length is now 75 weeks, up from 51 weeks at the start of 2017. The UK has a dire shortage of property available to rent, and many landlords have chosen to sell their properties in recent years making the most of any capital appreciation, together with the lack of homes being built each year to meet the overall demand for housing – property in the UK is in constant high demand and is set to be so for many, many years to come.

A key driver of the rental markets in urban settings has been the return of those who left the city centres during the pandemic who are now returning en masse as many companies return to largely office-based working once more. One central London estate agent said two-fifths of those actively looking for the rental property were London returnees.

Mind the gap warning

Key Stats about UK property market Q2 2022

  • Strong price growth: Annual average property price growth in the UK is 10.5% (Halifax)
  • House prices are £24,000 higher than a year ago, The average UK house price was £278,000 in March 2022. (Office for National Statistics)
  • UK house prices have risen 74% in the last 10 years (Halifax)
  • Rising rental values: UK rents are rising at the fastest rate on record and are up 11% year-on-year (Rightmove)
  • Longer tenancies: UK tenants are now staying on average an additional 5 months compared with five years ago (Zoopla)
  • 4.4 million households use the private rented sector in England
  • 49 per cent reduction in properties available to rent in 2022 compared to 2019 (Propertymark)

Outlook: UK property market

Demand continues to outstrip the supply of homes available for sale and let across the UK but there are early signs of caution with wider economic factors having an impact on decision making. There is likely to be a disparity between what certain sellers are expecting to achieve and what buyers are willing to pay, particularly in the second-hand property market. 

Investors are increasingly looking to off-plan options that come with more realistic price tags, in ideal locations, where rental demand is strong and for those looking there are some excellent future-proof opportunities on the horizon. 

The second half of 2022 promises to deliver strong returns for those who already own investments given the sharp rises in rental yields across the country. And whilst the market is likely to be less frenzied, it will remain busy by historical standards. Those seeking to secure an investment in the coming months may have the opportunity to buy remarkable assets whilst the mainstream narrative has heads turned.

To explore property investment further get in touch with us for a no-obligation discussion.