2021 was certainly a sensational year for the UK property market. This year has been one of the strongest and most dynamic times for the UK property market.

In this article, we want to talk about how this growth has manifested itself in 2021 and what has caused it. Based on that, we try to give an outlook for 2022.

What were the driving factors in 2021?

The strongest factor driving growth in the property market in 2021 was definitely the sharp increase in demand for houses. In 2021, many British people had to spend a lot of time at home due to work-from-home regulations and lockdowns. Because of this, many people felt confined to their homes and the desire for a larger home was very strong.

For these and other reasons, demand for property increased extremely and was on average over 20% higher than in a comparable year. However, supply could not keep up with this increase in demand, resulting in about 30% fewer properties for sale than the average. As a result, almost all available properties in the UK were sold very quickly, resulting in the average property being on the market for only about 30 days.

As a result, prices in the UK property market rose very strongly. Currently, growth is around 7%. Rents, of course, are growing in line with rising property prices, with the average rent in the UK rising by 4.6%.

London is a clear outlier in these figures, as property prices in the capital actually fell in some places and rents only rose by 1.6%. This can sometimes be attributed to the fact that people prefer larger houses in the surrounding areas of the big city. However, now that office space is once again increasingly needed, demand for property in London is on the rise again.

Will growth slow in 2022?

Towards the end of this year, it was already apparent that supply and demand in the property market will slowly begin to converge again. Contributing factors will include many new construction projects starting next year in response to the strong property market and an increase in interest rates, as well as the rising cost of living due to high inflation.

This will reduce demand due to the reduced purchasing power of the British and new construction projects will increase supply. Therefore, it is expected that the extreme growth in 2021 will be dampened in the coming year. However, the now increasing demand for property in London could be a driving factor for the UK property market next year.

Conclusion

The UK property market is showing signs that growth is approaching average levels again next year. With demand falling slightly and supply rising, market forces will ensure that price rises are somewhat muted.

However, this doesn’t mean that there will be no good deals next year. There are always opportunities that a smart investor can take advantage of.