2021 is around the corner. While looking back on 2021, with the Covid pandemic still causing havoc, it has been a year of significant changes for the UK property market.
Housing prices have been rising like never before, even though the pandemic is still going strong and Brexit is being finalized. Residential property was ever so popular during the pandemic, attracting new capital to the sector.
With a high demand for homes and lack of houses, we expect these investments to remain strong in the long term with Build-to-Rent investments to reach new records. In 2021, renting was officially cheaper than buying in terms of monthly payments; still rental market has continued to grow. This, in combination with the increase of the price in materials, ensures that house prices in UK will not crash as expected but maintain a steady climb, especially in major cities such as Birmingham, Manchester etc.
While investors no longer showed interest in off-plan investments since construction was put on hold during lockdowns, the Stamp Duty changes positively influenced off-plan investments again. They also revived activity with the UK house price inflation reaching the highest growth rate in almost seven years. The cities with the most substantial price growth were Liverpool, Manchester and Sheffield, all located in northern regions.
International investments in UK property took a big hit in 2021. International investors have shown interest in residential property in secure and financially stable cities.
Even though other countries are showing a struggling economy along with other cultural problems due to the pandemic, the UK is quickly becoming the world’s hotspot for property investment.
Trends from the last few years have become even more apparent in 2021, especially with increasing numbers of people living alone and adult children living with their parents. Another trend we saw rising in 2021, is the growing demand for space. We have noticed new developments in the heart of the city that offer communal gardens or outside areas.
Overall, the property market has flourished in 2021 and more of the same can be expected in 2022. It has never been more apparent that investment, in general, is key to creating the life you see for yourself in the future and property is at the forefront of this vision, as it has been historically for many years.
More probably, price growth will continue to rise into 2022. House price growth is estimated to be highest in the North West of England and the East Midlands and weakest in London. As these regions show more capacity for growth, they will show stronger price growth. Birmingham, for example, has the fastest growing economy in the UK and with the HS2 train line and many main companies relocating to the city center, prices as well as demand have increased dramatically and will continue to do so well into 2025.
Demand from buyers for UK property will continue to run strong into the next year and the shortage of homes remains a severe problem. Especially young professionals are likely to look for rentals, which highlights an excellent potential for rental investment returns. We believe rental prices will grow even stronger as the UK market continues to grow alongside increased demand.
Working from home has induced a search for space amongst many office workers who now look for a more suburban lifestyle with more green and freedom to settle. This trend will continue to grow over the next few years with more and more people open to working flexible hours providing they have the space and facilities to do so.
To summarise, the majority of the UK is set to stay on this upward trend. House prices will continue to rise alongside the rental market and more and more homes will be built in all of the major cities just to keep up with demand. For an investor, it’s a really exciting time to delve into the UK market with opportunities all over.