What will drive the property market over the next couple of years? Hamptons dusted off their crystal ball to highlight some of the areas property investors might like to keep an eye on.
As part of the UK's largest estate agents, Hamptons have a well respected research department and a good dataset to work from. They recently offered their thoughts on developing themes in the UK property market.
First time buyers squeezed
The cost of living crisis will be most keenly felt by first time buyers. Rising interest rates will limit the amount they can borrow, while higher living costs will restrict their ability to save a deposit. Hamptons expect the share of properties bought by first timers to drop from 26% currently to below 20%.
Cash buyers in the driving seat
Higher mortgage rates will push cash buyers to the front of the queue. 54% of households own their homes outright, giving them a lot of equity to play with. Downsizers in particular will have their pick of the smaller properties.
Local house price variations to narrow
With work-from-home seemingly here to stay, people have more flexibility to choose where to live. Freed from the daily commute, they will be able to live in different neighbourhoods, nearby towns, or even adjacent regions. One effect might be the equalisation of property prices.
A bounceback in the demand for flats
The sale of flats fell last year to the lowest level since 2002 but are now rising again, reaching levels last seen immediately before the pandemic. This is likely to continue due to the more attractive financial proposition they offer.
Low yielding buy to lets to be sold
Higher interest rates and the likely costs involved in the proposed energy efficiency upgrades will make the lowest yielding properties unviable. Many landlords will sell, though they are likely to use the proceeds to buy higher yielding properties elsewhere.
Mainstream houebuilders to move upmarket
With the pressures faced by first time buyers and the end of Help to Buy, housebuilders are likely to move away from smaller properties to larger homes in more affluent areas where deep pocketed buyers can be found.