Will 2022 be the time to invest in property?
Another new year is approaching, but unlike the last, 2022 should arrive with significantly less uncertainty, especially for the property market. Not only did the initial stamp duty deadline present the possibility of a crash in property prices for 2021, but the ongoing Covid-19 uncertainty made for a bleak economic forecast.
While an economic rebound is in full swing, and pre-pandemic conditions are on the horizon, what does 2022 hold for the UK property market?
SevenCapital, a leading UK property investment and development company, here discusses whether the new year will be the time to invest in property.
The Economic Outlook
Following the 9.9% contraction in the economy throughout 2020, the slightest growth in 2021 would have put the country on a brighter path for the year. Although initial forecasts capped GDP growth at just 1.1%, the rollout of the Covid-19 vaccination programmes catalysed an economic recovery that has far surpassed expectations. With travel restrictions easing and many industries reopening, forecasts anticipate that by the end of 2021, the economy will have expanded by 6.8% – a 5.7% increase on initial projections in just a few short months. Despite the loosening of travel restrictions, the regulations surrounding international travel have further propelled the property market. The increasing appeal of ‘staycations’ has seen a boom in the short-term lets market, with suburban spots and coastal towns becoming hotspots for short stays.
The rise of short-term rentals is not only set to continue benefiting the UK property market, it is also giving investors significantly more choice when it comes to property investment. Combined with the projected 5.3% economic growth for 2022, this growing optimism offers both an increase in investment opportunities and the reassurance of a thriving economy.
Promising Property Forecasts
While the property market defied all expectations throughout the global pandemic and thrived in the midst of a recession, the economic outlook for 2022 coincides with both rising property prices and strong rents.
The conclusion of the stamp duty holiday could have gone a number of different ways – most of which ended in demand plummeting and property prices falling. Instead, the momentum from this tax incentive is expected to maintain price growth for the new year.
Not only are forecasts anticipating a further 3.5% rise in property prices in 2022 – following the 9% increase we will have seen by the end of the year – but by 2025, total growth in the property market will reach around 21.5%. For those looking to invest in either 2021 or 2022, this highlights the growing opportunities for capital growth in the coming years.
Property is a long-term investment, which we will seemingly continue to see in 2022 and beyond. But with UK rental prices also set to increase by up to 17% by 2025, the passive income that property offers is yet another reason to invest in 2022.
Property Goldmines in 2022
Although growth within UK property has spanned both the sales and rental markets, certain cities and towns have expanded more than others. Specifically, some of the country’s established cities, such as Birmingham and Manchester will always remain serious contenders for investors, but many emerging locations are offering investors more food for thought. For those looking for a city with a long history of both economic and property price growth, Birmingham will always be a goldmine, offering more affordable prices than the capital but with comparable potential. As
discussed in the SevenCapital ‘Birmingham Investment Guide’, property prices across the second city are averaging £214,696 for 2022, which when combined with its 6.56% rental yield, makes Birmingham a prime investment for the new year.
That said, the rise of the outer commuter belt and suburban spots has highlighted numerous pockets of potential. For example, Bracknell – a commuter town just 49 minutes from London – is projecting rental growth of 8% by 2025 and property price increases of around 19.1%. Bolstered by a multi-million pound regeneration scheme, property in Bracknell could offer investors almost 20% capital growth by 2025, emphasising the unique opportunities within the Bracknell property market.
Derby is yet another emerging market that has thrived since the pandemic and is on track to become one of the leading cities in the UK. While Derby already houses global businesses, including Rolls Royce and Bombardier, it’s home to one of the largest city centre regeneration sites in the country. As a result, the city is forecasting a rise in both demand and the property
market in the years to come.
When it comes to property investment, there is no ‘one size fits all’ approach and more often than not, there is no right time to invest. Although investing is unique to each and every person, 2022 is presenting a wealth of opportunities for the UK property market. Not only is the momentum from the stamp duty holiday set to sustain a strong demand for property – both in established cities and emerging markets – but the positivity of the 2022 economic outlook offers the reassurance of a healthier economy supporting further property growth.