How the 2022 spring property market is shaping up

Home » How the 2022 spring property market is shaping up Published: 12th May 2022 This Article was Written by: Adrian Anderson   property prices , spring 2022

The spring market is always a giddy time as homeowners take advantage of the brighter weather to sell and buy property. 2022’s spring market shows no signs of bucking the trend, but there are some nuances to it this season.

Adrian Anderson, founder of Anderson Harris Property Finance Specialists, shares his observations of the season so far.

From our ‘Proceedable’ buyers gain an edge

The first half of the spring market has seen high levels of demand with buyers continuing to seek larger properties and those with gardens. There remains a strong appetite for rural properties with people keen to swap an urban environment for one in the country. The challenge here though is the shortage of rural stock to meet that demand.

With so many potential buyers for each property, at the property viewing phase we have seen agents and sellers favouring those who are seen as ‘proceedable’. This typically means the buyer isn’t in a chain or, if they are, then their own property is under offer. It is prompting people to focus on attracting a buyer for their own property, before starting to view for one themselves.

Inflationary impact

There has been much in the press about the impact of rising inflation and living costs on the property market. On 5 May 2022, The Bank of England’s Monetary Policy Committee increased the base rate to 1% – the highest level in 13 years.

This rate rise will certainly not be welcomed by borrowers on variable rate mortgages, as the cost of their mortgage will increase. Interestingly though, 74% of UK homeowners have a fixed rate mortgage deal. These borrowers are unlikely to be affected by 5 May’s rise, however it’s likely that the fixed rates available in the future will be more expensive. Anybody with a fixed rate which is ending shortly should shop around as soon as possible.

As a result of the rate rises, we are seeing significant interest in longer-term fixed rate mortgages – for example for five- or ten-year terms. This is not surprising as people seek more certainty of their outgoings, as costs and interest rates continue to rise.

We have also seen homeowners overpaying into the mortgage as their current rate is most likely a lot cheaper than the rate they will have to move onto. In many cases policyholders can pay up to 10% a year without incurring early repayment penalties in their mortgage during the fixed rate period.

For now, the rising costs don’t seem to be putting off buyers at the premium end of the market and properties are often going for well above the asking price, particularly in the South East.

Regional differences

While the South East is currently having a very buoyant spring market, we are seeing a slight slowdown in other regions and with lower priced property stock.

How lenders are adapting

The rising cost of living has also led many banks to update their affordability calculators in the mortgage application process. Most use Office for National Statistics’ data to presume certain household outgoings. According to the ONS, the cost of household outgoings (including utility bills) has increased and is expected to continue to rise.

With this now factored into lenders’ affordability calculators, applicants may find the amount they can borrow reduces or there are challenges to their ability to secure the loan they want.

Looking ahead

Looking ahead to the remainder of the 2022 spring market, those seeking to purchase a high value property may be more insulated by some of the increases in the cost of living and inflation rises.

With the continued demand for people to move and the lack of decent available stock, it’s likely house prices will remain strong in many areas for now. It will be interesting however to see what the impact of higher borrowing costs and utility bills/household goods and services will have on the value of properties.

As always, it will be important for buyers to find the right mortgage product to both fund their purchase, and also be sustainable for them with future inflationary movements. Independent professional advice will help to determine the best product for them, not just now but also affordably over the long-term.

Contact our team of specialists on 020 7495 6633 or email enquiries@andersonharris.co.uk