Reviewing 2022 is a reflection on what has been a rollercoaster twelve months with a period of unfettered optimism making way for rapidly rising interest rates, inflation and headlines dominated by a cost of living crises. Whilst the outlook of today might not be as positive as it has been, the volatility that has beset both the country and by extension the housing market in recent months is showing signs of stabilising as we approach the New Year. Following the exceptional housing market of 2021 this year started well with robust demand and strong sales figures throughout Spring, Summer and Autumn before the market began to cool. Since the 2008 financial crash the housing market has seen mortgage rates drop to an all-time low, so recent interest rate rises have understandably caused uncertainty and an element of caution among purchasers. We have seen more purchaser incentives than ever before, particularly encouraging first time buyers to enter the market, albeit at a time when the cost of living is rapidly rising. Overall, the desire to move is proving resilient, however the higher cost of borrowing and living is something which will take adjusting to (let’s not forget mortgage rates of around 4-5% are below the historic long-term average). It’s no secret that property values have risen substantially over the last 2 years and 2022 was no different, and although we’re seeing values soften, we expect annual growth to return across Suffolk, Essex and Cambridgeshire once the interest rate curve starts to reduce as forecast.
The compound effect of a more uncertain sales market has seen a much welcome boost to the supply levels within our lettings portfolio. Whilst landlords have seen an ever-increasing raft of regulatory requirements, tenants have also experienced a challenging few years with a distinct lack of supply and rapidly rising rents making securing rental accommodation within the area increasingly difficult and unaffordable. We expect the level of supply and demand to be more balanced moving into 2023 with tenants able to take a more measured approach to selecting the most suitable property. The requirements of landlords are anticipated to become ever more stringent, and our lettings management team would be delighted to speak to any existing landlords or those considering a long term investment in what has historically been one of the nation’s favoured investment sectors.
Some of the key observations we have made are as follows:
- Valuations were up 5% across the group on 2021.
- Instructions were also up, 10% year on year.
- Enquiries and viewings were down on last year but still significantly higher than 2019, before the pandemic.
- Online activity via our website www.davidburr.co.uk has grown substantially attracting over 20,000 more sessions per month than in 2019.
- 32% of visitors to our website were based within greater London.
Whilst the outlook ahead is uncertain these statistics show there are reasons to be cautiously optimistic. The peaks of 2021/22 were exceptional, however comparing recent statistics to the last ‘regular’ year which came before the pandemic (2019), the market ahead could be very similar.
Prices have risen sharply over the past 2 years and are now correcting but the net gain is still a positive one. The ability for many of us to work from home will continue to draw urban families to the countryside. Commuter links from East Anglia means that the occasional commute is an attractive proposition and the number of new purchasers engaging with us is still significantly higher than 2019.
Interest rates are currently forecast to peak in early 2023 and mortgage rates expected to settle (and reduce gradually through to 2027) as inflation falls. Ultimately the advantages of living in our region will continue to draw new people into what is a thriving part of the country and with 7 regional offices and our team in London we are well placed to help both existing residents and newcomers find their ideal home in our region.
Finally, we reflect on one of our proudest achievements of the year, the launch of David Burr Holiday Lets. A sector of the market that has long since piqued our interest, we are delighted to offer a fully managed service complete with our housekeeping team, dynamic pricing software, free cleaning, linen stores and unlimited owner stays. Early indications suggest this has been a well-received offering by our clients and we look forward to hosting many more short breaks into what promises to another busy year ahead.
Thank you to all that we have worked with through the year, wishing you a Merry Christmas and a healthy and prosperous New Year.
Luke Johnson.
