The lockdown dream of leaving the city behind and owning a spacious house in the countryside or by the sea faded in 2022 as homebuyers picked up where they left off before the pandemic: house hunting in London.
Rightmove said the capital was 2022’s top location by some distance with searches 9% higher than last year. Meanwhile the number of searches for homes in Cornwall and Devon fell sharply although the counties, famous for their spectacular coastlines, hung on to second and third place on the property website’s annual list of most searched for locations.
During the pandemic the dramatic shift to home working saw many Britons rethink where they wanted to live. For several months of 2021 Cornwall was more popular than London on the site, although the city ended the year in first place overall.
However, in 2022 the mindset of buyers returned to pre-pandemic norms, Rightmove said, as while searches for London properties increased by 9%, for Cornwall and Devon they were down 18% and 17% respectively.
That meant London ended the year with 36% more buyer searches than Cornwall, which is the biggest gap since 2019. In 2021 the gap between the two places was just 3%.
Tim Bannister, Rightmove’s property expert, said the tide started to turn towards the end of 2021 and this had continued in 2022 when a “lot of our trends in the market have started to head back towards where they were in 2019”.
But as memories of the pandemic faded, the cost of living crisis came to the fore. In the rental market searches for “bills included” are up 57% on this time last year as renters worry about soaring energy costs, Rightmove said.
It had been the most competitive rental market on record, with quadruple the number of tenants inquiring about properties to move to, as there were properties to rent in 2022.
Homes sold fastest in Scotland, where Livingston, in West Lothian, was the year’s “quickest market” with homes finding a buyer in an average of 15 days. All of the top five areas are in Scotland, with Bo’ness, West Lothian in second place and Larbert, Stirlingshire, third.
Higher borrowing costs, coupled with the predicted recession, means the storm clouds are gathering over the UK housing market after several years of some of the biggest rises in property prices ever recorded.
The general view among property experts is that prices will fall in 2023 but there is no agreement on by how much. Forecasters have been wrong on this before but this time there are factors, such as the recent jump in borrowing costs, that increase the likelihood of a downturn.
The Bank of England has raised interest rates steadily over the past year from a record low of 0.1% to 3.5% at this month’s meeting – with further rises forecast. There was some evidence of a weakening housing market as the number of home purchases had fallen to below 60,000 a month, the lowest since 2013, it said.
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While the Halifax thinks rising mortgage costs coupled with cost of living pressures will push house prices down by about 8% in 2023, in a report published on Tuesday Nationwide argues that a “soft landing”, with prices edging lower by about 5%, is possible.
Robert Gardner, Nationwide’s chief economist, said the “risks are skewed to the downside, but there is still a good chance that we can achieve a relatively soft landing next year with activity stabilising modestly below pre-pandemic levels and house prices edging lower, perhaps by around 5%”.
“The Bank of England is likely to raise interest rates a little further, although in recent years most borrowers have opted for fixed rate mortgages which are linked to longer term interest rates that may have already peaked. If so, this will help provide some support to affordability as will solid gains in nominal earnings growth and modestly lower house prices.”
Rightmove is still predicting the traditional Boxing Day bounce when buyers log on to Rightmove after spending Christmas with friends and family.
“We’re hearing from agents that they are getting properties ready for sale to go live on Boxing Day,” said Bannister. “We’ve seen a group of people using the past few months to assess their options and consider what they can afford, and they could be spurred on next year should fixed-rate mortgages drop as anticipated.”