Written by Mr. Kunal Sawhney, CEO, Kalkine Media
The UK’s housing sector has witnessed a boom in 2021 as behavioural changes in home buying led to a ‘race for space’ amidst the pandemic. The latest data by building society Nationwide revealed that UK house price annual growth rate surged to 10.4 per cent in December this year, the fastest pace in about 15 years. At the same time, the average UK house prices in December touched record highs, at £254,822.
The pandemic related lockdowns and restrictions led to a marked shift in homebuying behaviour, while the historic low-interest rates and stamp duty cuts have been the major growth factor for the housing boom.
However, the scenario may not remain the same in the years to come. As per the latest forecast, the sector is expected to witness a slowdown going into 2022 after the stamp duty cuts ended in September and the central bank went for a rate hike despite Omicron fear.
What could happen in 2022?
The growth scenario may witness a change to the downside, but the sector is expected to continue seeing high demand amid historic levels of low stock going into 2022.
The demand for rural properties and open spaces is sticky, with buyers opting for the house with a completion date as late as May 2020. Thus, indicating this is going to remain persistent well into the new year.
High hopes from the industry
Given that demand is sticky, especially in the sub 2 million brackets, housebuilders are expected to focus more on new developments in this range.
Additionally, there had been a rise in demand for inner-city homes due to the increase in and flexibility of remote working. This trend indicates it could be a geo-economic shift rather than a previously expected post-pandemic related behavioural change.
Obstacles and the need for government support
The lack of building materials due to ongoing supply chain-related disruptions and challenges is a major factor impeding the supply of stock in the housing sector.
If the government comes forward and offers grants and schemes to help businesses in the sector when they are required to place advance stock orders for materials, it could be a big help for the industry.
Streamlining construction applications is another major area where the government can chip in since it is one of the major impediments that has caused significant delays. Apart from that government’s focus on social housing is another area that can support the sector.
Lack of staff shortages has been another major factor for the industry. One way to help address this challenge is by offering skill training, providing access to non-UK based workers, which can also help address wage inflation challenges and more.
Another area that can help in addressing staff shortages is continuing the hiring of more apprentices.
Overall, while there is some uncertainty as to how well the sector can perform in 2022, the government, industry and other stakeholders can work collectively to help the housing sector sustain its growth.