2022 Property Market Roundup: What Happened to the UK Property Market in 2022?

Average property price: £274,000

12-month price growth: 9.6%

Average rent PCM: £1,064

12-month rental growth: 8.5%

Monthly rental growth: 0.4%

January saw the UK property market continue the strong positive growth that 2021 ended on, with a rise in property prices of nearly 10%.

On a regional level, the East Midlands had the largest growth, coming in at an annual rise in prices of 11.6%. London lagged behind the rest of the UK, only recording a growth of 2.2%. This is partially due to the lower affordability of the London property market, as it traditionally lags behind the rest of the country.

For example, the average price of property in London was £510,000, nearly double the national average. The North East had the lowest average property value, coming in at £150,000.

This growth kicked off 2022 in good fashion, with high demand for housing helping to drive the growth in house prices. Savills reported that demand for all kinds of housing was up 49% in the 4 weeks to mid-January compared to the same period 2018-21.

Partially, this was due to the low supply of housing available on the market at the time, meaning the market was far more competitive as more potential buyers were trying to purchase a smaller number of properties.

The rental market also experienced similar growth, with rents rising slightly from December 2021 as the high demand from renters carried on into the new year. This was exciting for buy-to-let investors, as it set up 2022 to be a prosperous year for the sector.

As more people began working remotely during 2021, where they chose to rent became more important. New build properties with lots of outdoor space and amenities such as gyms, concierges and parking became more popular as a result of this.

The North-West saw the largest month-on-month rental increase, with rents rising by 1.3%, while the North-East was the cheapest area to rent in, with an average monthly rent of £578.

Average property price: £278,000

12-month price growth: 9.8%

Average rent PCM: £1078

12-month rental growth: 8.7%

Monthly rental growth: 0.8%

Once again, March continued to show strong growth in house prices as the market remained hot despite low levels of supply.

Savills reported that March was the strongest monthly house price growth in 18 years at 1.1%, but that the low supply of houses on the market would mean that house prices would continue to rise.

However, there were signs that more properties were on the way, as surveyors reported an increase in the number of instructions, but this would not have any real effect on the market for several months at an optimistic outlook.

On a regional basis, Wales saw the strongest house price growth in the UK, as prices rose by 11.7% annually. Scotland had the slowest annual growth of any country, but even that was high at 8%.

Once again, the East Midlands had the highest regional growth of 12.4%, while London lagged at 4.8%.

For the rental market, there was similarly strong growth. Rental value grew by 10.4% according to Savills, a sign of the massive demand for rental properties.

The South West saw the greatest month-on-month increase out of any region, with rents rising 1.8% since February.

Despite this growth caused by a lack of supply, issues about energy prices and the cost of living began to emerge. While the high demand for rental properties would mean rents continued to rise going into Spring, these cost of living concerns would cause more issues for the property market as 2022 progressed.

Average property price: £283,000

12-month price growth: 12.8%

Average rent PCM: £1103

12-month rental growth: 10.6%

Monthly rental growth: 1.1%

While not quite as high as April, May continued the strong trends of growth 2022 had seen thus far. Despite the positive growth, this was the first sign that the rapid growth that the UK property market had seen until this point was cooling off.

This was no cause for alarm, however, as the housing market was reaching a natural peak in prices which would be healthier for the sector in the long run, as otherwise, housing would become unaffordable for the majority of the population.

Despite the first signs of a cooling-off period, May still showed that there was greater demand for housing than could be kept up with, stimulating further growth.

There was more confidence for first-time buyers, as UK Finance reported a 16% rise in mortgages given to first-time homeowners compared to pre-pandemic levels.

The East Midlands had a staggering 15.2% annual growth, whilst once again, London was the most sluggish market in the UK, only showing a growth of 8.2%. Wales had the largest annual price increase of 14.4%, while the average house price in England surpassed £300,000.

Homelet recorded the highest-ever annual growth for rents in its index for May 2022, as the rental market’s growth hit double digits. Some areas of the UK had even higher rises, such as Greater London (15.7%) and the North-West (11.3%).

However, there again were signs that this unparalleled growth was not sustainable, as the three-month rental increase had slowed down from 3.8% in November to 2.2% in May, and some areas like London had seen even slower three-month increases.

Average property price: £292,000

12-month price growth: 15.5%

Average rent PCM: £1127

12-month rental growth: 9.5%

Monthly rental growth: 1.3%

Despite June’s downward trends, July saw the housing market rally to bounce back as house price growth rose to the highest rates we had seen in 2022. This was the highest annual inflation rate we have seen since 2003.

However, the numbers do not tell the whole picture, as this astronomical rate of growth is mostly due to the lower prices the housing market saw last year as a result of the stamp duty holiday. Were it not for this preventative measure to encourage spending after the COVID-19 pandemic, it is unlikely we would see such a large rise in prices.

Prices rose by an average of £6000 from June, but there were still signs that the market was slowing down. Savills reported that there were 13% fewer transactions in July than compared to pre-pandemic levels.

Scotland saw a rise of 17.6%, the highest out of any UK country once again. Northern Ireland lagged behind the rest of the UK, only seeing a growth of 9.6%.

From a regional perspective, the South-East had a drastic level of growth, hitting 20.7%! Other investment hotspots like the North-West also saw high levels of growth, with an annual rise of 18.1%.

The rental market also had a strong month, with the largest month-on-month increase in rents we saw until this point in 2022.

Savills reported that the rate at which rents were growing was almost six times pre-pandemic levels, with the fastest-growing rental markets being Greater London, the North-West and West Midlands.

While the housing market was fluctuating between hot and cold, the rental market proved to be stable and strong throughout the first half of 2022. For investors, this is a sign of reassurance, as it means investing in buy-to-let property continues to be a safer method of investing.

Average property price: £295,000

12-month price growth: 9.5%

Average rent PCM: £1159

12-month rental growth: 9.2%

Monthly rental growth: 1.4%

With a lower demand for housing due to the cost of living crisis combined with the tumultuous political situation coming from Kwasi Kwarteng’s mini-budget and the death of Queen Elizabeth II, it is understandable why September did not perform as well as previous months.

On a month-by-month basis, the average house price fell in real-money terms from August despite showing growth from 2021. This is a reflection of the lack of confidence many had in the UK’s economy, as the value of the GBP nosedived to its lowest-ever values in September.

While for many this would be cause for worry, for foreign investors, this presented an exciting opportunity. With the GBP’s value so low, they could invest in UK property for cheaper amounts and get more value for their money.

On a regional front, the South-West had the largest annual growth at 11.9%, while the North-East lagged at only 5.8%.

Despite the rocky month that the housing market was experiencing, the rental sector continued to maintain steady growth in September.

Rents across the country continued to rise, with Greater London experiencing the highest monthly growth at a massive 2.5%.

However, interest rates rose as a measure to combat inflation, which made borrowing buy-to-let mortgages harder and harder for investors. With BTL mortgages already having higher interest rates than standard, this would become a less valid way of investing in property as 2022 came to a close.

Therefore off-plan property became a more popular way of investing, as the lower prices and flexible payment plans help avoid the need for a BTL mortgage in the first place.

Average rent PCM: £1175

12-month rental growth: 11.1%

Monthly rental growth: 0.3%

November continued the trend of calming growth that we had seen in the rest of Autumn 2022, as reports indicated house prices reached a natural peak that would begin to fall going into 2023.

Savills reported that house prices fell by -0.9%, the largest drop in house prices since June 2020. This took house prices back to the same level as in April 2022, as the cost of living crisis tightened its grip to make housing more unaffordable for many.

The market activity also began to reduce, as mortgage approval levels fell to pre-pandemic levels according to the Bank of England. The rising rates may have reached a peak, however, as the Bank of England raised mortgage rates for the third time in November.

This did calm slightly towards the end of the month, as Bloomberg reported that mortgage rates fell below 6% for the first time since October at the end of November.

November also saw the end of Help to Buy, which ended on 31st October. This affected the number of first-time buyers who could afford property, which would also be a cause for the falling house prices.

In terms of the rental market, there remained a steady level of annual growth but a month-on-month growth that was reduced from what we had seen earlier in 2022.

With rents across the UK only rising by 0.3%, this is likely another reflection of the cost of living crisis meaning rental fees are reaching a natural limit alongside house prices.

The North-West saw the highest monthly growth in rents, rising by 1.2% since October. Regeneration areas in cities like Liverpool and Manchester helped to keep the North-West competitive throughout 2022 as one of the best areas for buy-to-let investors.

Several areas saw rents fall slightly in the UK, including Northern Ireland (-2.1%), Scotland (-1.1%), the South-East (-0.2%) and the East Midlands and South West (both at -0.1%), suggesting rents reached a natural peak across the UK.