Market Update: Q1 2022
In 2021 this blog included eleven market updates.
The last of which was published as December was drawing to a close, and reflected on an astounding eighteen months in the property market.
And yet here we are, into the fourth month of 2022, and I’m yet to write one.
Partly because there's been other things that I wanted to talk about, like Moneyball, Paying Attention and Primrose Hill.
I’ve also been doing more thinking. This week, amongst other things, about whether Broccoli is a divisive vegetable.
I learned to cook at around eleven years old. By the time I hit my teens, I was better at it than my Mum. It was a low bar, and it still is. Thankfully, she has a multitude of other talents which more than compensate.
Rather unsurprisingly, I grew up hating vegetables.
Until I realised (mostly thanks to the late, great and often drunk Keith Floyd) that their preparation didn’t have to include boiling them for half an hour.
Unfortunately for her, the late ‘80s and early ‘90’s were also the era of the dinner party.
These get togethers included a now largely defunct and bizarre set of rituals. Which included several days worth of preparation, seating plans and in my house, chronic anxiety over what would be served.
Or more specifically, what was least likely to kill the guests.
Which neatly takes me to my actual point. Which is that after nearly two years of unabated house price growth, we are now well and truly in the midst of what I’d like to call a Dinner Party Market, or DPM for short. You heard it here first.
It’s when the housing market gets so hot, that it becomes an unavoidably hot topic.
And here's the place where it often ends up.
“Did you hear how many bids the Jones’s at number four had on their house? And how much it ended up selling for”?
Here are the statistics.
March saw a further acceleration in annual house price growth to 14.3%, the strongest pace of increase since November 2004.
The price of a typical UK home is now 21% higher than before the pandemic.
The number of mortgages approved remained high in February, at around 71,000. Nearly 10% above pre-pandemic levels.
The value of UK housing stock increased by £804 billion in 2021 to a whopping £8.41 trillion (a sum just shy of the combined economic output of the UK, Germany, France and Italy).
Rightmove has described the current situation as the “best ever spring sellers’ market”. The portal reported “the greatest imbalance between buyer demand and the number of properties available for sale that we have ever measured at this time of year.”
According to Savills, 83% of its London agents said they had seen an increase in competitive bidding. 60% of the agency’s sales in Wandsworth have gone to best and final bids since the start of 2022, the proportion in Primrose Hill is currently at around 50%, with Chiswick not far behind at 40%.
Last year's market updates focused on the reasons behind this unprecedented surge in buyer demand, and if you like, you can read them here.
But I’m not going to go over old ground. Partly because it feels to me like change is afoot.
It’s more gradual than the jolt with which the housing market came back to life after the first lockdown of 2020, but it’s noticeable nonetheless.
The London market will continue to be nuanced. Much of the growth and activity will be focused on zone two and beyond, but it will slow.
This will continue to be driven both by the desire of families for more space, but also changes in working patterns, which I discussed in last week’s conversation with Jonny Rosenblatt of Spacemade.
With more people demanding greater autonomy, and being offered flexible working, the desire to be close to central London is diminishing.
In zone one, better known as prime central London, things are slightly different. According to Knight Frank prices are 16% lower here since the start of 2016. Savills reckons it's an 18% fall since 2014.
But there is renewed interest.
Thanks to the return of some who left London for the countryside during the pandemic, and also the gradual reemergence of overseas buyers.
In fact, the number of new prospective buyers registering with Knight Frank in prime central London was 84% higher in Q1 than the five-year average.
In the short term, interest rates will continue to rise to combat inflation.
Many homeowners took out five year fixed rate mortgages when interest rates were historically low.
They’re going to be re-entering the mortgage market at some stage in the near future, and when they do, the lending environment will probably be very different.
The Bank of England is going to need to think very carefully about the effect that this will have on a country already in the grips of a cost of living crisis. The Monetary Policy Committee has a hard road to navigate.
And for the rest of us? Well, hopefully not a resurgence of nouvelle cuisine. But maybe a slight rebalance.
Data provided by PrimeResi, Knight Frank, Savills, The Bank of England, Twenty Ci, Rightmove & Nationwide
I made a short film about my latest property for sale.
Things I’ve been inspired by this week
Jeen-yuhs, a Kanye Trilogy is a three part Netflix documentary about the life of rapper, record producer, and fashion designer Kanye West.
Such is the spotlight that’s on him now, it’s hard to imagine a time when no one wanted to pay Kanye West any attention.
But it’s all there, perfectly documented. Twenty one years in the making, it takes you on a deeply personal journey from obscurity, to worldwide fame and billionaire status.
And you don’t need to be a fan of his music to understand what you’re seeing.
Through a relentless desire to succeed, the resilience to continue despite repeated rejections and the support of his mother and those close to him, you see a first hand account of the rise of a supremely talented human being.
And what you also see is what fame, money and adulation can do to a person's sense of self, and the effects on their mental health.
I think it’s the most interesting thing I’ve seen this year. You can watch it by clicking the image below.