Dean Markall, Sales and Marketing Director at Martin Grant Homes, comments:

“2021 has been the sequel to a truly unpredictable 2020, and while it seems ludicrous to even try to predict what 2022 may bring, there are some growing hints that we may still see struggles yet. While we treacherously coin phrases like post-pandemic and return to normality, the industry is facing even wider challenges – not least a shortage in materials across the board which may stunt the industry’s attempts to build the volume of new homes needed. 2022 will also see the beginning of Help to Buy’s shutdown, a scheme so successful that it has propped up the housing market since its inception. There is no doubt we will see a ricochet effect across the country as the rug is pulled out from underneath us, although hopefully the introduction of schemes such as Deposit Unlock and access to 95% mortgages will minimise any impacts.

However it’s not all doom and gloom as we have also seen new hotspots emerge across the country, with the East Midlands performing exceptionally well and experiencing its very own boom this year. Northampton in particular is a hidden gem in the Midlands, and with no dominant second homes market, prices are generally within budget for local first time buyers and second steppers alike. No longer is London the centre of the housing market, instead I suspect we will see new powerhouses form in 2022.”

Simon Cox, Managing Director and Founder of independent land agency, Walter Cooper:

Mainstream housing market

“Firstly, I think demand will still outweigh supply for house buyers. If we believe what we are reading, then interest rates will rise, so money will become more expensive to borrow, which will lead to a drop in demand in the latter part of the year where house prices will stall slightly due to affordability. However, as construction plays catch up, this will help us meet our new homes targets and boost supply. You take from one hand and give with the other, so all in all I think it would be surprising if things were markedly different than where they are now.

Affordability will be one to watch over the next 18 months. I don’t think the First Homes scheme that is replacing Help to Buy will work in the south east because its capping peoples prospects to sell on, putting them at a disadvantage to become second steppers.”

Construction

“We will see a levelling off in material shortages and construction prices as we recover from the pandemic. As logistics recover from their position of furloughed staff and closed factories, the tap will be turned back on. We saw the effects of this in the early part of the year, where a ripple became a wave – and we’re dealing with the wave now, but this will flatten again.”

Industry and politics

“There will large number of acquisitions of SMEs by much larger companies and institutional investors, as they struggle to bear the burden of the past 18 months coupled with rising costs and an end of Help to Buy. I wouldn’t be surprised if we saw a new housing minister: history is instructive and tells us that we will. Gove is assessing his position politically more than producing real change. Boris doesn’t look like he is wielding huge amounts of power at the moment. If current trends continue, it wouldn’t be outlandish to predict a leadership challenge for the Conservatives, but we’re still waiting for the effective opposition both internally and from the opposition benches.

I think we’ll see a lot of changing of the guard at the back end of next year, as a new generation of leaders in the property industry comes forward after a year of COVID and assessing lifestyle changes. We will see a huge shift of power towards the ESG movement where businesses will need to prove a minimal level of requirements to access investor funds and progress. We are already seeing that now, but it will certainly become more prevalent next year.

The Developers tax was a soundbite and although it will raise some money, it will likely be brushed under the carpet next year. The tax will be absorbed and premiums will be hidden amidst rising house prices. It will be part of the appraisal when choosing land, but won’t bear a huge amount of economic significance.”

Land values

“We will continue to see pressure on land values, however many will hesitate to push much further; it will simply be too hot for them. If we see a stagnation or reduction in house prices then land values will follow in the same trajectory.

A significant proportion of brownfield land won’t come to the fore next year as intended. The finite amount of land that is available is often not suitable to build on; it’s not always old factories.”

Planning

“Unfortunately, there isn’t the political appetite for any real changes to happen in planning next year. Section 106 will continue to be a sticky point – what we need to see really is more education around what the 106 and CIL money is being used for, rather than rewriting the script.”

COVID

“In almost every developer contract when purchasing land you have a Force majeure clause, in essence an act of God type event. It’s a bit of a catch-all type clause to cover unexpected and unavoidable events. But now outside of that clause we are seeing reference specifically to a pandemic. No one could have predicted this pandemic, but now it is actively dictating the way forward. Housebuilders have been forced to ask, ‘what happens if we can never leave our homes again’, and ‘how do we cater for that within property design?’.”

Location

“We’ve all had that moment of realisation when working from home on the dining table, with a toddler on your back and the dog barking, just isn’t viable anymore. Working from home is now being taken more seriously, however this won’t ever replace the value of face to face working. We’re a service led country now more than a manufacturing one, so the value of face to face will never go away. Covid has also heighted our need for community and connection, as well as flexibility. When someone takes being able to see your friends, family and colleagues away from you, you then cherish it a whole lot more. People are actually actively looking for those connections – particularly when it comes to building properties and places to live. Although migratory trends to jump over the M25 have been sped up over lockdown, every location remains anchored by infrastructure and transport, for people to stay connected to city hubs. Infrastructure projects are key to opening up more geographical locations and realising this dream. The new communities of the future might be 15 minutes further out, with developers incorporating more meetings hubs and co-working spaces over retail.”

BTR market

“There are more institutional funds available now to purchase land under the Build-to-Rent tenure, more so than we have seen historically. This is an active market and one that may make more noise in 2022. However, that being said, making the transaction stack from an appraisal perspective is proving harder due to house prices increasing and rental values remaining relatively stable. This means BTR (PRS) operators are having to be very selective about where they purchase land which means it can be a slower process to get a foothold in the market.”

Santhosh Gowda, Chairman of property developer, Strawberry Star:

Interest Rates

“Although the Bank of England is holding rates for now, its highly probably that a rise will come in early next year. In the short term, a small incremental increase in interest rates may spur more buyers to complete sales sooner rather than later, to benefit from the currently more favourable rates. However, if we see the number of fixed-rate mortgage offers drop as a result, we may see first-time buyers seek more affordable alternatives, whether that be casting their property search even wider to include better value homes slightly further out, or even looking to other housing solutions such as long term rentals.”

Bright year ahead for Build to Rent

“2022 will be the year of Build to Rent. Stock is astonishingly low, both in lettings and sales supply, putting huge pressure on prices and forcing people to make some really tough choices on where they can live. We saw last week that Zoopla reported a 13-year high in private rental values, whilst demand for rental homes was 43% above the five-year average but the number of properties available to rent was 43% lower than usual. BTR provides an obvious solution to this highly pressurised market, boosting much needed supply and replacing many private landlords who left the sector after a turbulent pandemic year.

BTR can often be an affordable alternative to those in the Private Rented Sector (PRS) too, complimented by the amenities on offer which play to modern, urban lifestyle choices, from on-site cafes to 24-hour concierge. Professionally managed lets remove a significant amount of worry for tenants, avoiding difficult landlords and sub-standard homes.

Today’s younger generation, after lockdowns stuck with Mum and Dad, are yearning for independence but can struggle to make that first move into buying their own home. BTR is a great stopgap solution, and one that will grow over the coming years as more major sites are finally delivered. Nearly all BTR schemes are located in cities identified as having increased housing targets, underlining the important role these homes have in meeting our national housing targets. Likewise, we are have seen a wave of investors turn to more resilient companies which are based in BTR. This year saw a near 80% increase of capital invested into the sector compared to 2020, so it’s not unreasonable to suggest investment could triple as we head into 2022, having shown incredibly strong rental resilience during an unpredictable year for the UK economy.”

Edward Heaton, founder and managing partner of buying agents, Heaton & Partners:

Living trends

“This year saw some unexpected living trends in the prime sector. A resurgence in demand for indoor swimming pools, which after the amazing summer of 2020 looked as though it might be a thing of the past. Incredible pool complexes with slides from bedrooms and retracting roofs are definitely back on the agenda. Lockdown spurred a renewed popularity in games rooms, cinema rooms and teenage dens kitted out with all the bells and whistles. This separated space for adults and children will stay for 2022, with homeowners feeling increasingly less focussed on open plan living. I have also noticed a growing trend for people to be planting small vineyards at their homes with the dream of being able to serve their own wine to friends in a few years’ time.

There continues to be a definite move towards self-sufficiency, from creating vegetable gardens to installing storage power facilities to provide for breaks in the power supply. Yes, buyers want a large boot room and larder, but they also want to know what renewables can be incorporated into the running of the building to keep their carbon footprint, not to mention annual costs, down. And long may this transition last! It will be the practical conservation of many a historic house that will allow our architectural legacies to thrive. One of my clients recently refurbished an old listed farmhouse, introducing air source heating, a water harvesting system and a significant number of solar panels on the back of a nearby outbuilding. They are also planning to install a wind turbine, and they expect to be a net contributor to the national grid by the end of this process. I suspect this will become a much more common story in the next few years.”

Prime Country market

“While the virtual fist fights in the street for the best country houses may have subsided slightly, there are still plenty of fisty cuffs going on. Supply remains low across the board, with movers turning to buying agents to help uncover hidden gems. Undoubtedly 2021 has also been the year of the off-market deal. As a firm, we have only bought one property in the country for a client this year that was actually on the open market. Traditionally, we would expect to buy about 70% of our properties off-market, but this year that has been thrown out of the window. We are going into 2022 with as many clients looking for country houses as we did at the start of 2021, and that in the context of having had a record year for buying in the country just shows the level of unsatisfied demand that still remains. To say the £2m to £5m country house market remains fiery hot property right now is an understatement! Unless something dramatically changes overnight to significantly boost supply, this trend will remain in the first few months of 2022. There have been some extraordinary prices paid for prime country houses this year and overall prices have risen by at least 20% since their pre-pandemic levels. My view is that these prices will become the new normal and we do not expect to see any softening of country house prices.

We are however hopeful for a little more stock next year and early indications are that selling agents have been having more conversations with prospective sellers this year than at the same time last year. Downsizers in the main have stayed put during the last 18 months and clogged up the market. But off-market sales, without a stampede of people viewing their houses, has often allowed some to sell quickly and efficiently and feel safe while doing so. We hope more take this step to ease supply pressures.

Whereas 2020 and 2021 have been dominated by those seeking second homes in the country as well as lifestyle buyers looking for a new way of life, we are starting to see the return of our more traditional client base; what I typically describe as the prep school market: late 30 or 40-somethings, moving out of West and South West London looking for great prep schools in the home counties. Many such would-be buyers have had to resort to renting over the past year because of the absence of suitable properties to buy. Nevertheless, there are still plenty of these buyers around. With more than one school we have a queue of prospective clients waiting for our next opening.

We continue to see buyers exploring areas further from the traditional London anchor; the further reaches of Wiltshire, Dorset and Norfolk are doing incredibly well. Most buyers believe they will never have to return to an office in the capital five days-a-week, flipping traditional migratory routes on their head. Villages on railway lines with good access to London remain ever popular such as Kintbury, Bedwyn, Whitchurch and Twyford. Strong peripheral cities outside London will continue to have bullet-proof markets, like Winchester, Chichester, Canterbury and Oxford. With stock so low in this cities, it remains a sellers’ market.”

Prime Central London

“It has been an unusual year in London. What started as feeling bleak, actually saw a surprisingly large number of transactions given the lack of international buyers. Domestic buyers, or at least those who live in the UK, have dominated transactions this year unlike anything we’ve before for generations. The dingy basement flat saw a revival as the gorgeous garden flat, with outside space at a premium.  Small flats with no outside space in the thick of London have suffered most, and some canny buyers have hoovered up some great deals as a result. Trophy penthouses were snubbed in favour of smart family houses with outside space in leafy locations like Wandsworth, Hampstead and Wimbledon.

Internationally, many had their hopes pinned on Hong Kong buyers coming over here thanks to the new visa route, and although we did see a healthy wave, it was just a drop in the ocean to the overseas drive prime London is very much used to. The backlog of international buyers is only just coming through now, so I think next year will be very busy for PCL. We expect there to be a jump in activity in the boroughs of Westminster, Kensington and Chelsea next year.”

Super Prime market

“Next year will see super prime returning with a bang. International buyers, as well as returning ex-pats, are on our books looking for a large slice of quintessential England; these are serious estate buyers looking for significant acreage, with a significant country house to boot.”