The 2022 housing market: opportunities and obstacles?

By Vadim Toader, CEO & Co-Founder, Proportunity

Buying a property isn’t just an investment – it’s a home. A place to laugh, cry, raise a family and sometimes a place where you can simply chill out on the sofa. A place of safety and security. Many however saw their plans of moving into their dream home shattered because of the pandemic.

People looking to buy a home were overwhelmed with concerns and questions about whether to buy, as uncertainty ran high. Would the market suddenly slow down? Would options of finding their dream home become even more limited? Would the housing market collapse?

However the housing market correction hasn’t arrived. Instead, as people spent more time at home and realised what they wanted from their home, the housing market flourished in the pandemic like never before. Viewing homes in haste and quick offers being placed – often well above the asking price – almost became a competitive sport at a national scale.

In May 2020, the Bank of England warned of a potential 16% fall in property prices due to the pandemic. Against many such apocalyptic predictions and armchair analysis, the industry defied the odds, and did not just survive: it thrived, soaring to all-time highs.

Today, home buyers are asking the same questions, once again faced with economic uncertainty. How will they cope with the realities of the cost of living crisis and the rising inflation? Will these challenges pose any opportunities or are they only obstacles for those on the hunt for a home?

Opportunities

According to the Bank of England mortgage lending stats, the housing market remains resilient. The market grew by £6.7 billion in Q1 of 2022 only, when compared with the previous quarter. While lower than Q1 of 2021, there is still a clear appetite for buying and selling homes in the UK.

The housing market has maintained a strong track record over the recent years by remaining resilient. With more homes being listed now compared to previous quarters, buyers have more choice. Want a kitchen island? No problem. Want a pink exterior? Got it. Off street parking a must? It’s yours. The variety is endless, making finding your dream home easier than ever before.

Obstacles

House prices have gone up by a lot, and first-time buyers are being left behind. Nationwide’s figures for May 2022 put the average house price at £269,914, an increase of 11.2% over the year. Rising prices means 1.2 million properties now require higher stamp duty charges, as well as higher income and deposit requirements from cautious lenders in order to get a mortgage at a decent rate (with a lower loan-to-value).

It’s not just those who are new to the buying journey either, existing homeowners who have been saving for a larger property have seen the goalposts moved again, meaning they have longer to wait. With the increasing cost of living and rising inflation, it seems that saving for a deposit is more challenging than ever before.

With the government’s Help to Buy scheme set to come to an end in a few months, the market and government need to be working together to support first-time buyers. The additional taxes are a huge barrier to those wanting to get on the property ladder. If addressed, one obstacle could be completely removed from the track to homeownership.

Leveraging opportunities to break down obstacles

Alternative financing is one route to help democratise home ownership. Some of our customers for example, nurses Irvin De Guzman and Christine Sanchez never thought that they’d be able to buy a home in London. The couple had managed to save around £20k towards their dream home, but with London prices being exorbitantly high, Irvin and Christine were a long way away from making a purchase. Determined to continue experiencing the excitement of the vibrant city life, the couple decided to look into other financing options. With the Help to Buy scheme not suitable for them due to limited new build projects in their area within their price range, the couple turned towards the Proportunity Mortgage Booster. It’s through Proportunity that the couple were able to access the deposit boost needed (10%) to buy their flat of around £300k in North London.

For first-time buyers saving up for a deposit, it’s important to be financially informed. Alternative financing solutions can help them purchase their dream home earlier and take advantage of a rare slowdown in price growth in the UK housing market. Whether that’s offering a boost to their deposit or offering financial advice, help is available. The cost of living shouldn’t come between someone having the right place to laugh, cry, raise a family or just chill out on the sofa.