With the housing market ending 2021 on record highs for house prices, all initial thoughts running into 2022 has been in the area of positivity that it will carry over for many months to come.
However, due to the current surge in Omicron cases sweeping through the country and the potential for further restrictions to come back into play – the outlook may not be as bright as expected.
The current talk around the water cooler is that the housing market will see a slowing sooner than expected in 2022, especially if vendors are deterred from allowing some viewings of properties.
The Omicron variant could be the biggest factor reinforcing the slowdown if it leads to a weaker labour market. If wider economic conditions remain resilient, higher interest rates would also provide cooling down.
House price growth has steadily outpaced income growth significantly in the past 18 months, leaving the affordability of housing less in favour than pre-pandemic levels. At this point, uncertainty is the name of the game.
In 2021, the strength of the market surpassed all expectations and has the potential to do so again as 2022 progresses. The market still has significant momentum and shifts in housing preferences resulting from the pandemic and it could support activity and price growth moving forward. For the near term, however, the Omicron variant could serve to reinforce the shift in preferences.
The spread of the virus could also play a significant impact on 2022. In 2020, the first pandemic lockdown strengthened the demand for housing due to the pent-up frustration demand, fueled by the full loss of the ability to travel on holiday and the need for more space. This led to more and more people relocating from urban city areas to buy property in Stockport and other rural areas.
The appeal of greener pastures with good countryside links saw the most interest from first-time buyers taking full advantage of the stamp duty holiday, second home seekers and people wanting to upscale to bigger houses with more room. People as far as Birmingham and London sought out rural northwest areas in Stockport and Cheshire upon realising they could work from home – choosing a more luxurious setting away from the cities throughout 2021.
With rising Omicron cases in the Christmas run-up, as well as inflation and interest rates rising, reduced activity in the market was apparent yet not significant.
Many are suggesting that further Covid restrictions will lead to another dose of pent-up demand. The difference with this round will be the continued lack of supply compromising the momentum, as well as sellers potentially being put off of holding viewings for buyers out of concern for rising Covid levels in the area.