2021 is coming to a close. It’s been another tumultuous year in the property and buy-to-let market. So, for those UK expats and foreign nationals that didn’t get a chance to buy in 2021 or are looking to buy in 2022, Liquid Expat Mortgages have put together a buying forecast for 2022. We’ll analyse the data from some of the biggest researchers and explain what it means for UK expat and foreign national investors.
What’s in Store for 2022?
With such strong price growth across 2021 and rising interest rates in the offing, there will not be as much room for prices to grow in 2022. Lending will continue to be subject to high stress tests and lending caps will continue to be imposed for those looking to borrow at high LTV ratios. Because of these factors, Savills predicts a much more subdued growth in property prices – 3.5% in 2022 compared to 9% in 2021. Similar growth is predicted for the subsequent years with Savills forecasting growth of 3%, 2.5% and 2% for 2023, 2024 and 2025 respectively. Zoopla predicts a similar subdued growth in property prices, with a more conservative estimate than Savills, of 3% in 2022.
While interest rates are predicted to rise, Savills predicts that the rise will be gradual and will not have a drastic effect on affordability for UK expats and foreign nationals looking to buy with the help of a UK expat or foreign national mortgage in 2022. However, if interest rates are steeper than expected, growth will be severely hindered and – depending on the nature of the rise – could even turn to negative growth.
In terms of the areas of interest for UK expat and foreign national investors, these will remain the same with the North West, Yorkshire and the Humber, and Wales leading the way where growth is concerned. According to Savills, the North West and Yorkshire and the Humber are both predicted to grow by 4.5% in 2022, while Wales, Scotland, the North East, and the Midlands are all predicted to grow by 4%. This isn’t dissimilar from what we’ve been seeing in recent years and it will make sure that the North is leading the way when it comes to growth areas for investment.
Zoopla’s research suggests a similarly optimistic picture for the North West and the Midlands with their predictions forecasting 4% growth in the North West and the East and West Midlands seeing growth predictions of 4% and 3.5% respectively. However, their predictions for Wales, Yorkshire and the Humber, the North East, and Scotland are less optimistic than those projected by Savills. Zoopla predicts growth of 3% for Wales and Yorkshire and the Humber, with growth of 2.5% predicted for the North East and Scotland – below the UK average.
What Does This Mean for UK Expat and Foreign National Investors?
‘The consensus view seems to be that price growth will be much lower in 2022’ begins Stuart Marshall. ‘The steep price growth of 2021 along with strict mortgage affordability criteria and rising interest rates means that there is not as much room for prices to grow next year. The dampened price growth of property in 2022 will help to reassure many UK expats and foreign nationals who were unsure if rising prices were going to price them out of the UK investment market.’
According to research conducted by Zoopla, the numbers of people wanting to move is incredibly high – 22% of people currently want to move, compared to the usual figure of around 5%. But with the rising cost of living, increasing mortgage interest rates and rising tax bills, people’s ability to move will be hindered, especially if the supply of homes available to buy remains low. Liquid Expat Mortgages predicts that this will manifest itself in a buoyant rental market. ‘For those that want to move but are unable to buy, renting will be the only option’ says Stuart Marshall. ‘This will be the case for many first-time buyers who are priced out by the low supply in the housing market and unable to compete with existing homeowners who have benefitted from the equity they have built up in the last 18 months.’
‘Further, there will be a continued sector of the rental market devoted to movers who have sold their house but cannot find another home to move onto. Because of low stock and a competitive market, many who have sold their home have found themselves in a rental property until they can find a property that is suitable to their needs. This has created a whole new customer base for UK expats and foreign national investors owning UK property. With the market predicted to develop in the way it is, this is a section of the rental market that is going nowhere in 2022.’
‘There is a similar consensus on the property growth in the North West and the Midlands. These areas have been massive growth areas over the last few years and it’s not surprising to see an optimistic forecast for their growth prospects in 2022. For existing UK expat and foreign national investors, this growth will contribute to capital gains on your investment while making it more difficult for prospective UK expat and foreign national investors to find their way into these markets. However, there are ways to negotiate these rising prices, including the purchase of flats (which are growing at a slower rate but gaining popularity in the rental market meaning they are highly profitable), off-plan properties and student properties. Speaking to an expert broker, like Liquid Expat Mortgages, will help you to find the best way to invest in areas like this. And, with the help of a growing pool of UK expat and foreign national mortgages, investing in the UK is becoming increasingly accessible despite the more general investment landscape.’
‘We’ll have to see whether it’s the more optimistic or more conservative picture that comes to pass for Wales, Yorkshire and the Humber, the North East, and Scotland. But, regardless, the investment prospects presented by those areas to UK expat and foreign national expats remain strong. While the capital growth of these areas might be less than other areas of the UK, rental demand in these areas is sure to remain strong and make sure that yields remain high for discerning investors. In fact, lower than expected growth in these areas might help prospective UK expat and foreign national investors as a mismatch between growth in the purchase and rental markets helps to keep the cost of investment low and the rental yields high.’
‘One thing’s for sure, it’s set to be another great year to invest in the UK property market.’
Liquid Expat Mortgages
Unit F2, Waterfold Business Park,
Bury BL9 7BR
Phone: +44 (0) 161 871 1216
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