The UK housing market continues to defy the odds by continuing to rise to record levels. 2021 was a record year for the market, with UK house prices rising by an average of almost £24,000, resulting in a new average cost of a home being £254,822.
The stamp duty holiday and the pandemic-led ‘search for space’ among homeowners were two key drivers that resulted in the highest number of sales since before the financial crisis. This demand for houses in the past year has eroded the number of homes available for purchase, which has caused a huge imbalance between supply and demand, leading to an enormous amount of upward pressure on prices.
Another large driver of UK property purchases is foreign investment. With it’s consistent steady gains, the UK property market is seen as somewhat of a safe haven for foreign investors, many from the Far East, with Hong Kong leading the way off the back of the relaxed visa rules for Hong Kong Nationals following a change in Beijing policy. At Ocean Capital Exchange, we have recently seen an influx of both Hong Kong Nationals and British Nationals living in Hong Kong either moving to the UK for the first time or repatriating the savings they’ve accrued there. Relatively favourable exchange rates are another factor for foreign investment in the UK and have been since the Brexit vote in 2016.
Is 2022 the year you plan buy a new house? If it is, the good news is that there are signs that people are starting to take advantage of the ludicrously high prices by putting their house on the market. According to Rightmove, at the end of 2021, when compared with the same month in the previous year, we saw a 19% jump in people requesting an estate agent valuation. It is forecasted that price rises will be slower in 2022, which will encourage some homeowners, who have held back on moving, to take action. This will increase supply, and hopefully takes some pressure off the buyer demand.
In order to stem inflation, the Bank of England made the decision to increase interest rates for the first time in over three years, which came as an unexpected and unwelcomed surprise for many. This means higher mortgage costs for many current and would-be homeowners, which should serve to slow purchase demand and may, unfortunately, lead to many being forced to sell – this urgency of course helps drive down prices.
At present however, there is no doubt that the demand for houses is still at an all time high and after the last few years the housing market has faced, it will take a lot longer than a year for house prices to stop surging but 2022 could be a year where we start to see signs of a slower pace. For any cross-border Foreign exchange transactions, get in touch today to find out how you can reduce the cost and stress of sending money overseas.
(t) +44 207 183 2026